As you know, the profit from dropshipping is the difference between two prices of a product: the selling price displayed on your website and the price that your supplier sells to you.
So, the higher the price, the greater your profit, right?
Building the selling price in Dropshipping
Not necessarily.
Here is a list of important tips to help you build a pricing policy that brings the highest possible profit.
Understand Your Costs
This is fundamental and your starting point.
If your costs exceed revenue -> then what’s the point?
So, what are your costs in dropshipping?
- Cost of the product you buy from the seller: This is the most obvious part.
- Shipping costs: I advise you to choose items with free shipping or ePacket as it is the best option for both you and your customers. However, if the supplier charges you for shipping, you should include this cost in the final product price.
- Brand-building costs: You can create your brand by paying extra to the seller and asking them to include some advertising leaflets in the package or stick your brand on the packaging. This is sure to be beneficial for your business’s reputation and image. But if you decide to go this way, calculate your costs very carefully.
Market Research
Building the selling price in Dropshipping
If you don’t want to make mistakes with your pricing, examine your competitive competitors. Pay attention to the following:
- Are there any competitors in your niche market? If you focus on a very narrow target audience segment or your products are somewhat high-end, the strategy of your competitors really affects you. But, if your products are more general and your target audience is broad, you don’t need to rely heavily on competitive competitors – they will only give you a general idea of the market.
- What markets have the most potential for you? For example, the same phone case with the same design can have an average price of $15 in the US market and an average of $30 in the Canadian market. Focusing on the market gives you more opportunities to increase prices.
Increase Dropshipping Prices Now
Reasonable price increases are really beneficial for your business. Do you know why?
- An ultra-low price will not make you stand out in the competition. Customers interested in prices will spend time looking for even lower prices than yours, and in the end, you will not have a profit due to the inappropriate price. Focus on creating shopping deals.
- A low price does not create much trust in your product. Cheap products often look like very suspicious items with poor quality, and that’s not the reputation you want to build for your business.
- If a product looks like a luxury item, why be modest? Do not underestimate the items and set a price that is worth it!
- You can get a significant portion of your revenue from a small product group that is easy to track and manage. This product group includes your best-selling items. As soon as you know which items have the highest demand from customers, you can optimize their prices.
Think About Your Customers
Obviously, sellers can raise prices as much as they want, but does that price suit your customers’ expectations?
When you know who your target audience is, you can accurately understand how to build your dropshipping price strategy.
What does your customer value most about your product?
Perhaps it’s always available and easy to buy?
Or, conversely, exclusive and rare?
When you know exactly what makes your store appealing to your target audience, you can change your prices to generate more revenue.
Offer Special Price Deals on Your Dropshipping Website
Building the selling price in Dropshipping
Everyone likes shopping vouchers, discounts, and discounts. The more you offer them, the more likely customers are to buy from you.
That’s why you should set high prices at the initial stage. Then, you will be able to announce sales programs and discounts for some products.
Use the Price Markup Formula in AliDropship
When you have 20 items in your dropshipping store, obviously, you can manually adjust and change their prices.
Of course, it will take a little time and effort, not to mention you need to be patient, attentive, and remember a lot of numbers.
But what will you do when you have 50 products? 80? 100?
AliDropship will help you automatically adjust prices without having to spend a lot of effort on this.
Make Your Customers Act Faster
The super discount will end tonight.
Limited offers.
The last product in stock.
This price is only valid for the next 3 hours and 52 minutes.
Have you surely seen these things before?
This is a great strategy to create instant shopping deals – when you know that this great promotion will end soon, you don’t want to think too much. Instead, you quickly add an item to your cart and proceed to checkout.
Use Psychological Pricing Tricks in Dropshipping
There are 2 popular concepts:
- People subconsciously like odd-numbered prices, especially 7 and 9. Moreover, they often ignore the right part of the price, for example, reading 399k as 300k. That is the psychology.
- If your items are premium, the price of 500k seems more appropriate than 497k.”
