Determining the actual price or pricing strategy for your dropship products may not be as easy as you think. You don’t want to be too high or too low. If you feel the need to maximize your profits by increasing your prices, it may result in decreased sales volume. Also, if you lower the prices so you could sell more in volume, then you may be making less profit.
Now, the question is, how do you avoid all these imbalances. How do you find the perfect balance of how to price your dropship products. This is what this article is about to solve. Below are some of the pricing strategies for your dropship products:
This pricing strategy is quite simple. It involves setting out a profit margin that you want on all your products. Fixed markup comes as percentages. Therefore, if you want a 25% markup on all your products, this means if you have an item you bought for $30, you would add $7.5 to the price of the product when selling it. It is easy and simple to use; however, the amount of profit you will make depends on the retail price of the product you’re selling.
This pricing strategy is best used when you’re selling different types of products. With tiered markup, you can tweak your markup percentage based on the overall price of the item, which in turn allows individual product pricing. For instance, a 20% markup on a $600 product will be $120.
When you add this markup to $600 to make $720 selling price, it seems to be on the high side, and may even be way too much compared to your competition and what your customers can afford. However, you can use a 50% markup on a $10 product to cover your costs. 50% markup is $5, which sounds feasible.
Manufacturer Suggested Retail Price
Also called MSRP, this pricing strategy is for the people who would like to find a safe middle ground to pricing. It’s all about staying safe and making a profit after all. Not too high, and not low, the strategy keeps you out of the race to the bottom.
Your product’s pricing is according to their worth. What’s more? You can also pair this strategy with discounts to advertise your products, and compete with people who may have lower prices.
You might be familiar with this, ever come across a product with a price of $89.99? It’s a way of playing with human psychology. There’s this belief that an uneven price looks cheaper than a price with a full number.
Another example is that of a variety of items. An item categorized into three (3), say “Basic,” “Medium,” and “Large.” To bring psychological pricing in, you could say the prices are $1.49, $4.49, and $4.99, respectively. Now, the basic price is so low that people will think it’s not good enough, and they will want to go for more.
But then, they look at the medium and large, and they see how close the price is. At this point, they would think or conclude to go for the large since it’s just a difference of 50 cents in price. Why not go, all-in? The truth is the medium is just a decoy. Most times, they won’t go for it!
Competition based pricing is more like spying on your competitors to see how they go about their pricing. The idea behind this is to offer your products at a slightly lower price than theirs. This way, you steal their sales. There are many tools built for this purpose; some of them are Prisync and DSM tool.
However, there is the need to know that other online stores are leveraging these tools too. When they get a notification that someone beats their price, chances are they will lower down their price too. Sometimes, competition-based pricing is like racing to the bottom where everyone loses their margins, and at a point, no one would make a profit.
One interesting advantage of bundle pricing is it sets you apart from your competition. This pricing strategy can be seen everywhere, as online store owners are using it to pad profit on low margin items.
You can bundle your product pricing by adding accessories to larger products. For example, if your store sells shoes, many stores do the same. However, you can set your store apart from the competition by creating a bundle where you sell shoes, with socks, and shiners.
Free Plus Shipping
Simply put, free plus shipping is the act of selling your product for free, but indirectly using the shipping cost to cover the loss.
Have you come across Facebook ads that say, “I’ll give you an ebook for free; you just need to pay for shipping only.” Most times, this pricing strategy is used by influencers or stores to sell books so they can move people into their funnel, and sell something on the backend.
You can use this pricing strategy if you would like to do same thing as selling something on the backend. If you don’t plan on selling on the backend, then this method may not be suitable for you. The goal of free plus shipping is to get people to your store so that you could sell something else for them.
There you go! The ultimate pricing strategy for your dropship products. As shown above, there is no singular pricing strategy for your dropship products; there are many. You can try them all out and choose the ones best for your business.
Contact us today at Fulfillman to know more about our services. We specialize in providing excellent Drop Shipping services, Warehouse fulfillment, China sourcing, Third Party Logistics, and so forth. Our dedicated experts will be available to speak with you and discuss the options available to you. We guarantee you get quality and excellent services that gives 100% client satisfaction.