How ShipScout Scores Products
Every number is calculated with deterministic code — no AI guessing. Here's exactly how each metric works.
Financial Calculations
Gross Profit
Gross Profit = Selling Price − Supplier Cost − Shipping CostThe raw margin before fees, ads, and refunds. Many beginners stop here — but this isn't your real profit.
Payment Fee
Payment Fee = (Selling Price × 2.9%) + ₱15Based on standard Stripe Philippines rates. For other payment processors, adjust the percentage and fixed fee in the form.
Refund Allowance
Refund Allowance = Selling Price × Refund RateWe set aside a portion of revenue to cover potential refunds. Default is 5%, based on average Shopify refund rates (5–8%).
Net Profit
Net Profit = Selling Price − Supplier Cost − Shipping Cost − Ad Cost − Payment Fee − Refund AllowanceThis is what you actually keep per sale. If this number is negative, the product loses money on every sale.
Profit Margin
Profit Margin = Net Profit ÷ Selling Price × 100A 15% margin means ₱15 of every ₱100 in revenue is actual profit. We recommend targeting 30%+ for sustainable products.
Break-Even Ad Cost
Break-Even Ad Cost = Selling Price − Supplier Cost − Shipping Cost − Payment Fee − Refund AllowanceThe maximum you can spend on ads per sale and still break even. If your actual ad cost exceeds this, you lose money.
Recommended Price
Recommended Price = (Supplier Cost + Shipping Cost + Payment Fee) ÷ (1 − 0.30 − Refund Rate)The price you'd need to charge to achieve a 30% profit margin. If this is much higher than competitors charge, the product may be hard to sell.
Product Score (0–100)
The product score is the sum of five weighted categories. Each uses continuous interpolation — no cliff edges where a small change causes a big score jump.
Profitability (max 40 points)
Score = min(40, (margin% ÷ 35) × 40)A 35% margin earns the full 40 points. A 15% margin earns ~17 points. Negative margins score 0.
Shipping Time (max 20 points)
≤7 days = 20pts · 8–28 days = 20 × (1 − (days−7)÷21) · >28 days = 0ptsFast shipping is critical for dropshipping. 7 days or less gets full marks. Over 28 days scores nothing.
Supplier Rating (max 20 points)
Score = (rating ÷ 5.0) × 20A 5.0 rating gets 20 points. A 4.0 gets 16. Below 3.0 is a red flag for product quality issues.
Refund Risk (max 10 points)
≤3% = 10pts · 4–15% = 10 × (1 − (rate−3)÷12) · >15% = 0ptsLow refund rates are rewarded. High refund rates destroy margins and signal product quality problems.
Break-Even Flexibility (max 10 points)
ratio = breakEvenAdCost ÷ estimatedAdCost · ≥1.5 = 10pts · ≥1.0 = 5 + ((ratio−1)÷0.5)×5 · <1.0 = 0ptsMeasures how much breathing room you have. If your break-even ad cost is 1.5× your estimated ad cost, you can survive cost spikes.
Risk Levels
82–100
Strong
Safe to launch
65–81
Test Carefully
Thin margins
45–64
Risky
Likely to lose
0–44
Avoid
Don't launch
Default Values & Sources
| Setting | Default | Source |
|---|---|---|
| Payment fee | 2.9% + ₱15 | Stripe Philippines |
| Refund rate | 5% | Shopify average (5–8%) |
| Target margin | 30% | Ecommerce best practice |
| Supplier rating | 4.0 / 5.0 | Minimum acceptable |
All defaults are overridable — enter your own numbers for the most accurate results.
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