If you’re looking for a realistic view of how much money dropshipping businesses make, this is the article for you. There are a lot of gurus selling courses that will exaggerate the amount dropshippers make but I’m not selling a course and I have no reason to give you an unrealistic answer.
Average Income for Dropshipping Businesses
The average income for established dropshipping businesses is between $2,000 to $10,000 per month. Monthly income under $2,000 is on the lower side whilst anything above $10,000 is on the higher end and up to as high as $50,000 a month whilst a dropshipping store is scaling its business.
You may have seen YouTubers showing screenshots of their income from dropshipping which is often over 100k a month. This is very misleading for beginners for a couple of reasons.
Firstly, it’s easy to fake screenshots. By going into the elements section of the backend of a Shopify store, you can change the number of sales, the number of orders and the amount of revenue generated. Or you can simply create a ton of draft orders and take a screenshot to make it look like they are real orders.
Let’s be generous and assume they are not faking their screenshots. You also need to consider the fact that they’re showing you the revenue they generated, not profit. These numbers are very different. For more info, I have an article on dropshipping profit margins.
If someone is showing you a screenshot that they made 100k in a month dropshipping. Let’s take a closer look at standard dropshipping stores’ expenses.
1. Advertising Costs
This will be one of your largest expenses as a new dropshipping business. Although there are several ways of driving free traffic to a dropshipping store, advertising on Facebook, TikTok, Google or Instagram is the most popular and effective method of driving traffic.
2. Product Cost
The product cost is the other large expense for a dropshipping business. Most dropshippers will recommend selling products that can be sold for at least 3 times the product cost. I think this is a generalization and it actually depends on the products and their cost.
Below is a guide I use to calculate how to price dropshipping products but this may differ slightly depending on the products you’re selling.
| Product Cost | Selling Price |
|---|---|
| Below $5 | Minimum $20 |
| $5 to $10 | 4x Product Cost |
| $10 to $25 | 3x Product Cost |
| $25 to $100 | 2.5x Product Cost |
| $100 to $1,000 | 2x Product Cost |
| Over $1,000 | 1.5 to 2x Product Cost |
3. Shipping
Shipping costs vary drastically depending on the type of product, the size of the product, where the product is being shipped from and to and the shipping carrier you work with.
4. Shopify Expenses
Shopify expenses include the monthly plan fees, monthly costs for various apps cost and the payment gateway you use which is 2.9% with Shopify payments.
5. Virtual Assistant Costs
Most new dropshipping stores will not require a virtual assistant (VA) in the early stages but as a store starts scaling a VA will be necessary for customer service inquiries, order fulfillment and updating product information.
When you add up all these costs for a store that is claiming to make 100k a month, you’ll see they are more likely making around 20k a month which doesn’t include the taxes they will have to pay out of that.
Although it’s still a good monthly income, it’s not nearly as much as many dropshipping businesses claim they make.
How Much Do Dropshippers Make a Week/Month?
By far the best part of a dropshipping business is the low barrier to entry. By this, I mean how fast and cheap a dropshipping business can get started.
For this reason, many dropshippers don’t build one dropshipping store, they build multiple dropshipping stores. Once the process of creating a dropshipping business has been learned, it can be replicated several times. The most time-consuming aspect of a dropshipping business is testing and optimizing and is often an ongoing process.
This is how the most successful dropshippers make a good income. They outsource many of the day-to-day duties a dropshipping business requires and they focus their time on building a portfolio of dropshipping businesses.
It’s not unusual for a successful dropshipper with multiple dropshipping businesses to earn between $5,000 – $25,000 a week which equates to $20,000 – $100,000 a month.
Another reason most dropshippers create multiple stores is due to the volatility of the dropshipping industry. Dropshipping stores fail regularly and income fluctuates and it’s important to have several backups instead of putting all your eggs in one basket and focusing on a single store.
How Much Money Can You Make Dropshipping on Shopify?
I believe Dropshipping on Shopify is far more profitable in the long term compared to dropshipping on eBay or Amazon.
Although you don’t need to pay for advertising, there are several fees associated with selling on these online marketplaces. Not to mention the abundance of competition on eBay and Amazon making it difficult to charge premium prices and expect consumers to pay it.
One of the most important ways you can make money dropshipping on Shopify is by building a store and re-selling it. An established dropshipping Shopify store is a valuable asset that can be sold for a large sum of money.
Most dropshipping businesses can be sold for between 18 – 36 times their monthly income. Meaning a dropshipping store generating $5,000 a month can be sold for between $90,000 – $180,000. It’s not as easy to sell an eBay or Amazon dropshipping business for this kind of money.
The big money with Shopify comes when merchants transition from dropshipping into purchasing in bulk and building a brand. This brings higher profit margins, a more loyal customer base and the ability to scale a business with confidence.
For more information, I have articles on how to buy in bulk from China and how to brand a dropshipping store.
Summary
So now you have a fairly accurate view of what an average dropshipping business makes and the potential revenue it could generate, it may appear like a very desirable business to pursue. However, there is something to be aware of first.
The failure rate with dropshipping businesses is extremely high. For a beginner building their first store, I would guess the failure rate is above 95%. Each aspect of a dropshipping business from the products you’re selling, to the trustworthiness of a website and the ads you create, all needs to be spot on.
But if you’re willing to put in the work and be prepared to fail initially, a dropshipping business has the potential to make you a lot of money.
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