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How to price your products to make money in dropshipping?

How to price your products to make money in dropshipping
July 11, 2021
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Do not get stressed! It is possible to price your products to make profits in dropshipping. And you will learn how. 

You know about the biggest stores on the market: Amazon and eBay. Here’s a pro tip: these stores are definitely not your competition! 

Why?

Because these stores are reactive, not proactive. People who need to buy certain products are already there, on these websites.

You are targeting a completely different target audience. Specifically, you want to get people who are impulse buyers on Facebook.

Customers sure can get your products elsewhere.  But you will put the right products in front of the lazy people at the perfect time. And with the right offer, you will get yourself a customer.

Now, what kind of products should you not sell?

Use dropshipping pricing strategy

The answer is products with a low gross profit margin. For example, if the gross profit is $10, you will practically be left with no profit. That is once your CPP (cost per purchase) is factored in.

Therefore, avoid selling low-margin $10 profit products.

But do not be afraid to test different pricing structures. 

Higher ticket items give you more room to scale. Because you can spend more to acquire the customer due to a large profit margin. That means you can try spending more on Facebook and remain profitable.

How can you change your pricing structure? Be clever with your sales price and shipping costs.

Now, here is an excellent Pricing Example for you:

Pricing example for a product
Pricing example for a product

To understand the example step-by-step follow this guide:

  1. Calculate your total COGS (Cost of goods sold).
  1. Then derive your final selling price.
  1. Check other Shopify stores to see what price they are selling the same product at.
Pricing example for a product continued
Pricing example for a product continued
  1. Then, charge higher if you feel it has a higher perceived value. Check Amazon as a rule of thumb but remember that you can always charge higher.

Before we start with the next explanation, here is a cool rule. You will absolutely love it.

Prices that end in .99,.97, or .95 look better than .00. Price your products accordingly!

  1. Next, let’s learn about shipping rates and selling prices.

Some people like free shipping. While others prefer a lower front-end number and expect shipping to be added at the end.

For anything under $30, it is recommended to charge shipping ($3.99,$2.99, $4.99).

Don’t be afraid to change and test your pricing structures.

As you do so, you will find what works for your niche and different kinds of products.

Pricing example for a product
Pricing example for a product

Try to make the total price as close to the whole number as possible. And charge no shipping fee.

Congrats! You now know how to set different price structures for your dropshipping business.