High profit margins products are valuable because they earn more for the business per sale relative to what it spends. For example, a store selling two $100 products where one costs $88 to acquire and the other $61 nets $12 on the first and $39 on the second. Same price and same customer, but the second product generates three times the profit.
Profit margins also influence how much a business has to reinvest. In a 2025 Shopify survey,* 79% of store owners said they use profits to self-fund their business growth, covering everything from new inventory to marketing budgets.
This guide explains how to identify, source, and sell high-margin products for your business.
What is a high profit margin product?
A high profit margin product is one that produces a notable profit on each unit sold, meaning you spend less to source an item than your final selling price. For context, NYU Stern School of Business reports an average gross profit margin across retail of 33.18%.
How to calculate a profit margin
Calculating profit margin uses this formula:
Retail price - Production costs = Profit margin
The retail price is the amount the customer pays for an item. Production costs include raw goods, machinery, labor, and shipping. If you use accrual basis accounting, you might also include your marketing budget in production costs to inform pricing.
Shopify’s built-in profit reports track this automatically. You can find them under Analytics in your Shopify admin.
8 types of products with high profit margins
If you’re looking for high-margin profitable products to feature in your ecommerce business, there are several options.
Some of these products come with high retail price tags; others are relatively low cost to customers.
Here are eight product categories that can offer higher margins for some online stores:
1. Digital products
Digital products have low per-unit reproduction costs after creation. There is no physical inventory, packaging, or shipping, so additional sales often add little incremental cost.
Common digital products include ebooks, online courses, photography presets, design templates, music, and software.
Shopify delivers digital products automatically through the Digital Downloads app, where customers receive a download link at checkout.
2. Specialty products
Some specialty products have production costs that are low relative to their retail price. Phone cases, for example, wholesale for as little as $1.30 and retail for $15 or more, according to Podbase’s 2025 market data.
Examples in this category include:
- Phone cases
- Tote bags
- Kitchen gadgets
- Watches
- Pet products
- Collectibles like trading cards
Timbuk2, which makes specialty bags, and One Blade Shave, sell products in this category.
3. Beauty and skin care
Beauty and skin care products have an average gross profit margin of 64.39%. Some serums have formulation costs below their retail price by a wide margin and sell for $35 or more.
Common products in this category include:
- Serums and moisturizers
- Facial cleansers
- Hair care treatments
- Lip products
- Body care
“We try to go for accessible luxury,” says Razvan Romanescu, founder of Underlining, which launches niche beauty brands based on luxury trends.
“We’re not trying to sell at the highest price points. But we’re trying to give people the product quality, the product packaging, the same experience as if you were to go spend a ridiculous amount on some of the luxury brands, but at a price point that’s slightly higher than just a mass price point."
Private labeling is a common model in the beauty and skin care category. It involves sourcing a manufacturer who produces a product to your specifications, branding it as your own, and selling it under a proprietary brand rather than developing a formula independently.
4. Children’s products
The US toy industry grew 6% in 2025, with total sales up 16% compared to 2020, according to Circana’s Retail Tracking Service.Toys priced $30 to $69.99 grew 18% year over year, which was the fastest of any price segment.
Products in this category can include building sets, games and puzzles, trading cards, and licensed character toys. Licensed, collectible, and fandom-driven toys outperformed the broader market in 2025, with Pokémon reaching $2.5 billion in US sales, Cricana’s report found.
5. Home décor and candles
Home décor covers decorative and ambient products for the home, including candles, aroma diffusers, LED strips, wall art, and decorative storage.
The US candle business market alone generated $3.56 billion in revenue in 2025 with projections of $5.82 billion by 2033, with a 6.5% compound annual growth rate.
Businesses that make their own candles may achieve higher margins because raw material costs may be relatively low, especially if you market them as eco-friendly products.
6. Private label products
Private labeling is when a manufacturer produces a product to a retailer’s specifications, which the retailer then sells under their own brand.
Ecommerce store owners can partner with manufacturers to create private label products across a range of categories, including:
- Skin care
- Custom clothing
- Jewelry
- Fashion accessories
- Health and wellness products
The US private label industry reached $282.8 billion in sales in 2025.The figure covers all retail channels, not ecommerce alone, but reflects the scale of consumer demand for private label products across categories.
7. Health and wellness
Health and wellness covers physical fitness products, supplements, and recovery goods. One characteristic of this category is its repurchase rate. Seventy-four percent of consumers indulge in wellness products at least monthly, with customers subscribing to an average of 4.75 products each.
This category includes:
- Resistance bands and yoga mats
- Protein powders and vitamins
- Supplements
- Weighted blankets
- Recovery tools
The category is projected to grow too. For example, the US dietary supplements market is predicted to have a compound annual growth rate of 7.9% between now and 2034.
8. Dropshipping
Dropshipping involves selling products that are manufactured, warehoused, and shipped by a third party. There’s no inventory to hold and no warehouse space to rent. Print-on-demand is a subset of dropshipping, where products, e.g., apparel, accessories, or home décor, are only printed and fulfilled once a customer places an order.
The category is projected to expand. The global dropshipping market was valued at $453.81 billion in 2025 and is projected to reach $2.78 trillion by 2034, with a compound annual growth rate of 22.32%. The print-on-demand market was valued at $12.15 billion in 2025 and is projected to reach $46.43 billion by 2031, growing at a 25.05% CAGR.
How to find high-margin products to sell
Revenue and profit are not the same thing. A product with high sales volume can still generate low margins. Before adding products to your store, evaluate the following:
Quality and returns risk
High return rates increase costs and reduce margins. Before listing a product, ask for samples from suppliers, check customer reviews of the supplier, and make sure the product matches its listed specifications.
Set a returns threshold, and if a product’s return rate exceeds it, pull the product or find a new supplier.
Research demand and competition
High levels of competition can lead to price pressure, which can eat into a company’s profit margins. Market research can reveal sustainable customer demand for various products, and help identify sectors with high competitive density, including sectors where Amazon has a large market presence. You can also use product sourcing apps as a starting point.
“We tried to pick the nail category because it hasn’t been disrupted in a very long time,” says Razvan Romanescu, founder of Underlining. “If you look on the retailer shelves, you have your OPI, your Essie, your Sally Hansen—a lot of these brands were just grandfathered in and they’ve been there for a very long time, but they’re not moving at the same pace as a social-first or digital brand."
Reduce production and sourcing costs
Production and sourcing costs—including raw materials, equipment, real estate, and labor—are business expenses for commerce brands. Consider exploring supplier networks to find products with favorable wholesale pricing and shipping terms.
If you’d like to start dropshipping, specialized dropshipping apps can connect you with suppliers offering rates that allow for competitive pricing and automated inventory management, helping you maintain target margins without the overhead of traditional retail operations.
Read: Dropshipping on Shopify: Complete Beginner’s Guide
Factor in shipping and fulfillment
The size, weight, and durability of your products impacts the cost of shipping them to consumers. Smaller, lighter items require less postage, and durable items don’t require special packaging to ship.
You can still enjoy high profit margins selling heavy, bulky items like fitness equipment, but it’s even easier when you ship lightweight items like clothing or beauty products.
Set pricing based on perceived value
Prices that exceed market tolerance can reduce demand. Research competitors’ pricing to understand what customers are willing to pay for an item.
4 tips for maximizing profit margins
In a 2025 Shopify survey,* 20% of store owners said they regret scaling based on customer demand alone, wishing they’d waited until cash flow was stable.
Businesses launching or refining operations can maximize profit margins by using several approaches:
1. Look for niche opportunities where there’s high demand but low supply
Businesses have more flexibility pricing if the industry isn’t already filled with competitors. A business may prefer one category but choose another based on market conditions. For example, they may want to start a women’s clothing line, but market data supports expanding into another category, such as children’s products.
2. Negotiate with suppliers for lower prices
Instead of raising prices on your customers, consider increasing profit margins from the other direction. Shop around for suppliers and negotiate to compare and secure lower input costs.
3. Suggest related products
Suggesting related products to customers gives them the chance to add more items to their cart. This also increases your average order value, or AOV. Shopify’s free Search & Discovery app lets you add related and complementary product recommendations directly on product pages, customize storefront filters, and access analytics on how customers search and navigate the store.
4. Keep your pricing competitive
In some categories, products can be priced above competing offers. Research what comparable products sell for before setting your price. If the required price exceeds customer willingness to pay, the margin may not be sustainable.
*Based on a 2025 survey of 500 Shopify merchants conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established merchants with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all merchants.
High profit margin products FAQ
What products have the highest profit margins?
The products with the highest profit margins are those in which the cost to make something is significantly less than the price customers are willing to pay for it.
What are the challenges of selling products with high profit margins?
Selling products with high profit margins can increase profitability, but comes with challenges. One is balancing the equation of input costs and retail prices. When your input expenses go up, it can be tempting to raise prices to keep profit margins high.
Another challenge is that products with higher creative or labor input do not always produce the highest margins. For instance, you may want to start a jewelry business, only to realize you could net greater profits by mass-producing costume jewelry instead of handcrafting individual pendants.
What digital products have the highest profit margins?
Digital products like software, online courses, and digital templates often have high profit margins (as high as 70% to 90% in some cases) because production costs are low and there’s no need to pay out for shipping or packaging.
How do store owners find inspiration for high-margin products?
You can find great product ideas and trending products with a little bit of market research. Track worldwide or nationwide user searches with Google Trends or by following social media hashtags on TikTok and Instagram.
You can also browse your competitors’ ecommerce platforms and see what they’re selling. Sometimes, they even list their bestselling items, offering insight into what consumers are interested in buying.
What is considered a good profit margin for ecommerce products?
NYU Stern School of Business research shows the average profit margin in the retail sector is 33.18%, so anything above this would be considered a good profit margin.
