The Real Dropshipping Economics (Margins, CAC, LTV)

Impulse-buy gadgets: A 8–28 CAC on Meta
Pet niche: A 2–34 CAC, but 1.6–1.9x repeat rate
Apparel: A 8–55 CAC, sized inventory risk inflates returns
Wellness / supplements: A$35–70 CAC, but LTV can hit 3x with subscription

9 min · video · Beginner

Most dropshipping gurus quote revenue. The number that decides whether you eat next month is contribution margin after Meta tax. Today we draw the line between the two — with real AUD numbers, not screenshots of a Stripe dashboard at 11pm.

Revenue is vanity, contribution margin is sanity

Open any dropshipping YouTube channel and you will see a thumbnail with "$47,000 in 7 DAYS" stamped over a Lamborghini. That is revenue. Revenue is the number you tell your friends. Contribution margin is the number that survives a chargeback.

Here is the actual stack you need to subtract from every dollar of revenue:

COGS (cost of goods from AliExpress / supplier)
Shipping (your cost, even if you advertise free shipping)
Payment processing (Stripe, Shopify Payments — typically 1.75% + A$0.30 in AU, 2.9% + 30c in US)
Platform fees (Shopify A$50/mo, apps A$30-150/mo, theme one-off)
Ad spend ("Meta tax")
Returns and refunds (2-6% of revenue depending on category)
Chargebacks (0.3-1.0% — small but kills your account if it crosses 1%)
GST (10% in Australia once you exceed A$75k turnover)

What's left is your contribution margin: the dollars per order available to pay yourself, build inventory, and reinvest.