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 Cost

The 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%) + ₱15

Based 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 Rate

We 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 Allowance

This 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 × 100

A 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 Allowance

The 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 = 0pts

Fast 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) × 20

A 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% = 0pts

Low 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 = 0pts

Measures 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

SettingDefaultSource
Payment fee2.9% + ₱15Stripe Philippines
Refund rate5%Shopify average (5–8%)
Target margin30%Ecommerce best practice
Supplier rating4.0 / 5.0Minimum acceptable

All defaults are overridable — enter your own numbers for the most accurate results.

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