How To Price Dropshipping Products?

Not sure how to price your products for MAXIMUM profit? 

YOU may end up risking YOUR INVESTMENT if YOU don’t keep balance in pricing.

Customers run away, if you price HIGH. But you earn LOW profits for cheap product prices.

So what’s the solution?

For 10 years, we’ve helped THOUSANDS OF DROPSHIPPERS. You learn how to price dropshipping products in this guide. 

Keep reading, you’ll have the tools needed to set prices.

How To Price Dropshipping Products

What is a pricing strategy?

Pricing strategy is all about YOUR business charging per product from your customers. That’s how you assess PROFIT MARGIN.

YOU better source cheap products from affordable suppliers. And sell at great profits. Instead of looking for higher profit margins, focus on lower prices. Till, YOUR brand gets loyal customers.

The PRICE POINTS added in a pricing strategy:

  • Shipping details
  • Psychological pricing
  • Pre-set profit margin
  • Shipping fee
  • Membership fee
  • Marketing costs
  • Sales tax
  • All your expenses
  • Average order value

How do you calculate dropshipping profit?

How do you calculate dropshipping profit

Use this formula to calculate dropshipping business costs :

Total margin= Revenue – buying cost/ Revenue × 100

Through this formula, YOU calculate the profit at your fingertips. Subtract all the expenses from the sale price, and there you go. The remaining amount is the profit.

Another method to calculate the profit margin:

1: Determine what profit percentage you want to add to the product’s price.
2: Add all the expenses to calculate the retail price.
3: Multiply the retail price by the profit percentage.

    Example; $200 × 10/100
4: The answer is your total price with dropshipping profit.

How do price dropshipping products?

You decide on potential profit depending on many factors. The most important ones include product quality and other business expenses. Pricing products gets easier when you know the trick. 

Follow these steps to price your dropshipping products.

1: Calculate the Lowest Retail Price

The lowest retail price adds up all your costs for the product. It doesn’t include any profit. Instead, it has WHAT PRICE YOU GOT THE PRODUCT. 

Collecting all the base prices is to determine a higher sale price. Calculating expenditure might make you LEAVE BEHIND ANY FACTOR. Yet by calculating the least retail price of every product, you end this issue. Knowing the retail price, you can set the profit margin in a better way.

2: Know Your Market

Knowing about the market trends and people can help you decide pricing in a better way. Selling an OUT-OF-SEASON product at a high price will give you no benefit. Everything doesn’t depend on your choice. 

Think about it.

Of course, every seller wants to profit the most, but it’s only sometimes possible. A product you are selling may already be available in the market with the price. You need to add something extra to your product to charge more than that price.

3: Look For Competitors

It’s important to know what your competitors are selling at what price. NEVER CHARGE HIGHER than your competitors because it’ll repel the customer. Also, researching your competitors will give you an idea of the price.

Successful competitors will teach you what prices are acceptable in the market. If your competitor isn’t successful, try to learn from them. Reach potential customers using the ladder of competitors.

4: Focus On Target customers

Know about your target audience in detail. Their LIKINGS, ETHNICITY, AND INTEREST. It helps you understand what you can sell at a higher price in the market. High-in-demand things get considered more for high profit in any. While the ones that don’t get much attention.

Consider pricing from your customer’s perspective.

5: Decide Fixed Markup

Now is the time to decide your markup rate. Keeping an eye on the market prices, your profit must get justified. It’s better to calculate your competitor’s markup first. 

You can now adjust your profit margins, deciding the prices to sell. A reasonable selling price means more customers.

Tips for Pricing Your Products

Tips for Pricing Your Products

Some RESULT-ORIENTED pricing tips that YOU must know for better business strategy.

  • Products supplied from the inventory have the baseline cost as the BUYING PRICE. Yet, the product manufactured by you has a different baseline price. Want to know it? It’s the total of bulk materials divided by the total items purchased. 
  • Don’t start! First Underst what’s the profit margin in any business model? Why? YOU decide on DROPSHIPPING COSTS on your eCommerce website. Profit is the price above your invested price.
  • Do you know the purpose of fixed-cost items? They guide you on how many more sales you need. FACTORS FOR THE EXACT cost: rent, license, and more.
  • Let the customers give their reaction to your price strategy. You get LUCKY if CUSTOMERS ACCEPT THE PRODUCT PRICING. Your pockets are ready to get filled.
  • Offer free shipping on the product. Yet, add the shipping charges to the product’s price. You can make more potential customers with this. 

We can Made Drop Shipping from China Easy

Leeline Sourcing is to help Shopify & small businesses sourcing products from China and build your branded business.

FAQs about How To Price Dropshipping Products

How much should I charge for dropshipping?

YOU charge as you wish, until the price doesn’t offend your customer. Normally, it’s a good idea to keep the selling price moderate. Consider the total retail price of every product, market, and target audience.

What is the best profit margin for dropshipping?

Best profit margins range between 10 percent to 20 percent. Such a range keeps the dropshipping fees within the customer’s range. YOU get more winning customers. Another good thing is you’ll still get your profit without any loss. INCREASE the profit margin up to 30 percent when bought on WHOLESALE PRICE.

What is the easiest way to price a product?

Pricing a dropshipping product gets easy by adding all expenses. It also includes the shipping costs. Convert the profit percentage to numbers and add on the total expense price. Now you have the price of the product without using any formulas. 

What’s Next

Dropshipping models require CAREFUL CONSIDERATION and strategy for pricing. YOU need to pay GREAT heed to product costs, competition, and perceived value.

Remember to check and adjust your pricing strategy. Because market conditions change and your business GROWS.

Several dropshipping businesses have already LOST money due to poor pricing strategies.

Want to get saved from this MUDDLE? 

GET In touch with us to build a successful and profitable dropshipping business.

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Article by:

Sharline Shaw

Hey I'm Sharline, the founder of Leeline Sourcing. With 10 years of experience in the field of sourcing in China, we help 2000+ clients import from China,Alibaba,1688 to Amazon FBA or shopify. If you have any questions about sourcing , pls feel free to contact us.