Pricing in dropshipping is directly related to the product or service the business is selling or bringing to market. Although it is a fairly competitive business, the pricing strategy needs to be adaptable to the situation. You need to experiment and try different pricing options, explore new product lines to understand which are successful and which are not.
Without a well-calculated pricing strategy, you run the risk of either over-pricing or missing the point when you need to make a sale. Or, if you price an item too low, you'll reduce your margins and potential revenue. How to evaluate low, medium and high priced goods based on supplier prices? The experts at Betonlogos Czech Republic have listed the peculiarities of working with products in different price categories.
As the price range increases, so does the cost of goods. Therefore, when analysing the target audience, you need to clearly understand who is willing to pay for a product in this price range. If the majority of the audience knows nothing about the product, you can set the price at the level of perceived value. To determine the optimal price for products in this category, you need to clearly understand the cost structure and consider all costs.
Cost-based pricing and bundling strategies can be effective in mid-price categories because they take into account both internal business costs and customer interests.
You can set a retail markup of up to 300%, so it is important to monitor competitors' prices for similar product lines. Ideally, you should maintain a profit margin of $10 per sale.
Minimum profit strategy (cost plus pricing). In this strategy, the price is set based on the cost of goods, with a minimum markup added to achieve a desired profit margin.
Competitive pricing. When researching prices in a given price category, try to set prices comparable to those of competitors.
Middle price range ($10-25)
These products generally do not have a high perceived value and need to be sold in large quantities to make a profit. Marketing costs are typically 30% of the retail price. This type of dropshipping business is ideal for those who are just finding out how the business model works and want to try their hand at it.
Low price category (under $10)