How to Price Your Products for More Profits! (eCommerce)
Product pricing is something you have to master when running an eCommerce store. Setting the price for your products isn’t as simple as working out how much profit you want to make. There are many things that you have to consider, such as marketing costs, legal fees, etc. You also have to find competitor’s prices and promotions that might be happening on the market, which can profoundly affect the sales of your product. However, you shouldn’t be afraid to mark up your prices if the market conditions allow you would be surprised at how much consumers are willing to pay.
Before we explore some ideas to price your products, let’s first take a look at how a basic calculation of profit margins works. Let’s say you’re planning to sell a product at $50. The product costs $15 (30%) from your supplier, and it takes $10 (20%) or marketing fees to convert each customer. This brings your total cost up to $25 (50%), which means your profit is also $25, 50%!
On top of this, there are ways that you can maximize your profits or Return of Investments (ROI) with upsells or bundles, which we will take a further look into below. You’ll also learn about free ways that you can advertise your products.
Low Ticket and High Ticket Product Pricing
Low ticket and High ticket are terms used to describe the value of the items you wish you dropship. Low ticket products usually cost less, and high ticket products cost more, as the names suggest. There is a myriad of products that you can sell for massive profits. You can probably find a low ticket product for as little as $1 and sell it for $20 and make a $19 profit if you use free advertising. Although $19 is a considerable profit and might not be realistic, you generally want to make at least 30% profit and above. Also, if your store is still entirely new on the market, it would be worth spending more on paid advertisements to kickstart the traffic in your store. Then after you get some momentum running, you can focus on your returns and spend less on ads.
Next, we’ll explore ways to price your products that would make it seem more attractive to your customers and increase sales.
Psychological pricing is used in every business, and you’ve seen it everywhere with large, bolded numbers. Pricing products a little lower than the actual price at $1.99 or $99.99 somehow makes it seem more valuable to consumers rather than paying the whole $100.00. Somehow our brain still relates it at 99 than100. This method usually triggers impulse purchases, which I’m sure you’ve also been guilty of yourself. On the other hand, for higher-priced products, you might want to reconsider this method as $10,000 looks more friendly than $9,999.
Bundles are a great way to get a few products going at once for a single price. For example, if you’re trying to get rid of items that are slow-moving or expiring soon, why not bundle them with more attractive products? Let’s say you’re selling a pair of shoes; you can include some socks to go with them. Cosmetic stores do this a lot by adding free sheet masks if you purchase an item, and it works! The perceived value of the item increases as consumers think that they are getting two things for the price of one, increasing the chances of purchase. However, there is a downside that it might affect selling your products individually, so you should be smart in the way you market your products.
This next method is possible with a little bit of market research. Find out what your competitors are doing and keep your products slightly lower than theirs. What this does is attract more customers to your store than your competitors. So, even though you’re selling the product for way cheaper, at least your stocks are moving, and you would have a viable consumer base on your store. This method can be further maximized by negotiating with suppliers to get lower cost prices for the products. But if you’re just starting, this can be harder to achieve without affecting your profit margins.
Marketing your products above-market prices is also a viable competition strategy. This makes your products seem more premium or luxury compared to all the other dropshipping stores out there. Nonetheless, under most circumstances, people tend to go for cheaper products.
Free Plus Shipping
This was a popular trend back in 2018 when the dropshipping business was still starting. This method works mostly for lower priced items as you’re selling the product for free and charging a shipping cost. If you do this for higher-priced items, it wouldn’t seem realistic, and you’d most likely be making a loss. Also, having the word FREE in anywhere along your page will surely get people’s attention.
Discount can drive heavy traffic to your store as consumers are suckers for a good bargain. You can get large quantities of stock going if you price them for cheaper! Its also a good technique to reward your loyal customers so that they continue being loyal to you.
There are many ways you can strategically price your products to get profits rolling. Try testing out a few of these methods and find the one for you. Each niche is different as the products vary, and don’t be afraid of changing the prices as they do change with the market trends. But your ultimate goal should be ensuring that your costs are covered, and still have room for profit.
If your looking to wanting to take your ecommerce business to the next level or just wanting to start a dropshipping business, I highly recommend you try out a good course. Because, if your doing dropshipping chances are your gonna have to do paid ads and if you don’t know what your doing you can lose some SERIOUS amount of money.
Now, there’s a TON of overpriced courses out there claiming that they are the best however, a lot of times you could just find most of the information they offer for free on google. While that being said, I recommend eCom Elites because it’s taught by Franklin Hatchett who has makes 7 figures online and has been doing dropshipping years before it became famous and other gurus tried to jump on it. It’s also one of the most affordable course and value packed courses you can find. I have reviewed over 50+ dropshipping/ecommerce courses on here and NONE of them even come close. You can read my review on eCom Elites to see if it’s for you or not!