How To Price Dropshipping Products: 5 Pricing Strategies To Help You Scale In 2024

In previous article, we have explained how to select suitable products and suppliers. Now that your product is ready, how to setting appropriate price for them? A reasonable price ensures both profit margins and leading edge in competitive dropshipping market. Therefore, pricing strategy is important. In this article, we will help you analyze pricing components, how to control costs and set margin, then 5 dropshipping pricing strategies you may find very helpful.

Product Pricing=Cost + Margin?

Yes and no, it’s beyond that. A comprehensive product pricing involves cost, profit and other factors

Cost≠Price You Buy From Supplier

Before pricing ,you need to understand the true costs involved in each product, which typically include:

• Product cost The cost you spent on product cost from the supplier
• Shipping cost Cost for dropshipping each product
• Marketing cost This may includes website setup, store operation and advertising
• Salary and platform cost Money for paying employees and maintaining the operating platform
• Bank and account fees Generally 2-3%.

Optimizing Product Costs

We can divide all pricing costs into “dead costs” and “living costs”, by controlling “living costs” to benefits product pricing

Dead cost: product cost, salary, platform fees, bank fees, etc.

These costs are almost fixed. We don’t recommend chasing extremely low costs to chase high profit, it’s literally suicide, bad product quality will lead to long-term loss

Living costs: those cost you can possibly working on

• Shipping cost You can optimize shipping by exploring different agents and select the most competitive shipping lines from their shipping company. Many large shipping companies can offer cheaper price and better service.
• Marketing cost Building shop website by yourself and control advertising budgets can be workable, or even try not to invest in advertising at all. It’s worth noting that many well-known dropshippers are having great sales just publishing SEO articles to gain customers.

Setting Reasonable Margin

After erasing all product costs mentioned above, what left is almost your net profits. Here are two simple methods to pricing your profits at beginning.

Fixed Margin

You are able to pricing a fixed margin for each product, like 5$ or 10$, regardless of the product price being high or low. It will provide a clear profit in the short term, ensuring your positive returns. It’s also a method to test whether the product pricing strategy is reasonable or not. But in that case product pricing with low-value will lose competition, while high-value product with extremely low profits could impact your long-term benefits.

Margin Percentage

Setting margin percentage and check this formula if your profit is ok (Pricing – Product Cost) * Percentage = Actual Profit. A typical profit ranging from 10% to 50% is reasonable. Products need to be priced in at least two tiers based on value, low-value (less than $30) and high-value (over $100)

For low-value products, set profit percentage at least 20% to ensure you can truly reap some profits.

As for high-value products, you can lower margin to 10-15% if necessary, as they don’t even require high sales volume to protect your benefits already. Once some of products increasing sale, you can start consider lowering margin accordingly. Higher traffic will brings much far than short-term profits.

Other Factors May Affect Product Pricing

• Returns
• Shipping risks
• Taxes Policy

5 Dropshipping Pricing Strategies

Psychological Pricing Strategy

Some dropshippers may want to incorporate certain psychological triggers into pricing strategy, where price perceived by the customer is considered cheaper than it actually appears.

Odd-pricing $9.99 seems much cheaper than $10! Even though the difference is only 1 cent

Free shipping Would you prefer $5.99 plus $4 shipping, or $9.99 with free shipping? The indication of free shipping makes customer feel like they’re getting a deal. Because cheap pricing can make them perceive the product quality is bad.

Manufacturer’s Suggested Retail Price (MSRP)

By referencing MSRP, you can ensure product pricing does not exceed the price consumers expect. Discounting from the MSRP is a common direct dropshipping pricing strategy. For many retailers, their main selling point is the ability to offer discounts. For example, if the suggested retail price is $200 and there is 15% discount can be offered, it’s still profitable compared to the cost.

Bundle Pricing Strategy

When single product price isn’t attractive enough, consider creating bundle pricing, by offering 20-30% discount for two or three, so that you created a comparative advantage in bundled product pricing.

Instead of offering large discounts, consider using “buy two get one free.” Customers are often doubt large discounts, but replace with pricing strategy like this, or offering additional low-value product with single purchase, can maintains a comparable level of discount while boosting sales.

Competitive Pricing Strategy

Tracking your competitors’ pricing for similar products is a good idea to ensure you’re not pricing over the market level. With profits agree you can try attract their customers by lowering your price.

However, if you find that your product can’t be priced as affordably as your competitors’,

find some ways to enhance other value, including upper service and creating brand,

making customers to purchase from you even if they are aware of your higher prices.

Brand Premium Pricing Strategy

It’s reasonable for branding products have higher pricing than others. In the initial stages, you can build a loyal customer base loyal to your brand and maintain them. Once you’ve accumulated sales volume over time, you can consider customized packaging, logos, and even unique designs to further differentiate your product from others in the market. This can greatly assist your pricing strategy.

Many dropshipping suppliers or agents can help brand your product, whether through labels on packaging or inserts like flyers or thank-you cards. CreativeDrop offers branding solutions according to different products with lower MOQ, check our service, which can be very helpful to your product pricing strategy for sure.

Conclusion

Pricing your products may be a very challenging thing in dropshipping makert, we wish this article can be helpful to your pricing load and if possible talk to some experienced supplier or agent, see if they have good suggestions regarding the pricing strategy for the products you’ve selected. They might provide advice based on feedback from other customers and could offer recommendations on the best strategies for you. Contact CreativeDrop Now to getting advise for your dropship products pricing!