Why am I losing profit when using Zendrop with a 45% margin?

Product Development & Sourcing
, ,

Topic summary

Issue: New Shopify seller using Zendrop reports 2 sales totaling $95.20 but sees a -$31 profit in Zendrop despite setting products to a 45% margin.

Cause explained: A 45% “margin” setting on price doesn’t guarantee profit if all costs aren’t included. Additional expenses—shipping/handling (often charged by the supplier), payment processing fees, and actual product cost—reduce profit.

How to calculate: Determine Cost of Goods Sold (COGS) per item, then:

  • Gross profit = Sale price − COGS
  • Profit margin (%) = Gross profit ÷ Sale price
    Example given: $100 price, $55 COGS → $45 gross profit → 45% margin (before other fees). Real margins drop further once fees/shipments are added.

Next steps: Audit all per-order costs (Zendrop shipping, transaction fees, product cost), compute true margins, and adjust pricing or sourcing. Status: No final resolution; action is to review costs and potentially raise prices or cut expenses.

Summarized with AI on February 1. AI used: gpt-5.
1

Hi guys I to am new to shopify im useing zendrop I have had 2 sales that come to $95.20 now I have all my products set at a 45 % profit margin but when I go to zendrop it says my profit margin is -$31 so I don’t understand how I can have profit margins at 45% but be losing money any help would be greatly appreciated

1 Like
2

It’s possible that there are other costs associated with your sales that are not accounted for in your 45% profit margin calculation. For example, shipping and handling fees, payment processing fees, and product costs are all expenses that can eat into your profits.

To get a better understanding of your actual profit margins, you should calculate the cost of goods sold (COGS) for each product, and then subtract that amount from the sales price to arrive at the gross profit. The gross profit can then be divided by the sales price to arrive at the profit margin percentage.

Here’s an example calculation:

Let’s say you sold a product for $100.

The cost of goods sold for that product is $55.

Gross profit: $100 - $55 = $45.

Profit margin percentage: $45 ÷ $100 = 45%.

So, even though your products are set at a 45% profit margin, your actual profit margins may be lower if there are other expenses that are not accounted for in your calculations. I recommend reviewing your expenses and product costs to see if there are any areas where you can reduce costs or increase prices to improve your overall profit margins.