AliExpress Pricing: A Comprehensive Guide for Profitable Dropshipping
In the realm of dropshipping, pricing your products is a critical puzzle. Ask too much, and your customers will go straight to your competitors. Ask too little, and nobody will take you seriously. This article will give you a few helpful formulas to follow, plus reveal some efficient pricing strategies to keep your online business thriving.
In it, you'll discover:
Factors to Consider for Dropshipping Pricing
Best Practices to Price Products for Success
How Zopi Helps You Price Dropshipping Products
Final Words
Let’s dive right in!
Here are some factors that you are likely to consider when you price your dropshipping products:
Product cost is the price that your supplier charges you. If you purchase products in AliExpress, your product cost is made up of a few different factors:
First-Time Price: This is the original price of the product. Keep in mind that if a product has various options (such as different colors, quantities, or finishes), the prices may vary. To determine the final price for the product, make sure you select the color and size.
Discounted Price: AliExpress frequently offers discounts as part of promotions or limited-time deals:
Current Supplier Discount: Suppliers may provide a discount, which reduces the overall price. The duration of this discount is specified.
AliExpress Coupons: New users receive coupons for their first purchase. These coupons can further reduce the price.
Supplier’s Coupons: Some suppliers offer additional coupons. Check the conditions for obtaining these discounts.
Currency Conversion: Suppliers on AliExpress typically calculate prices in US dollars (USD). If you view prices in other national currencies, they are approximate. The exact value of the item in your country’s currency depends on the exchange rate on the day of purchase.
Since the supplier handles shipping your products to your customers, please be clear about the shipping origin, destination and shipping methods details for each product so that you can figure out shipping costs correctly.
Consider these expenses such as marketing expenses, your Shopify/Zopi subscription, and transaction fees, etc when setting prices for your products. These are necessary business costs, so your price must cover these costs at the very least.
Start by researching what your competitors are charging for similar products. Once you have a knowledge of your product competition level, you can set a price for your products more appropriately. If your competitors are selling similar products at lower prices, you should consider how to provide more value to justify a higher price. Conversely, if your competitors have higher prices, you may be able to win customers with lower prices.
The free plus shipping model is an enticing method that involves incorporating shipping costs into your product price to offer "free" shipping to customers. To implement this strategy effectively, you should set a shipping fee that covers both the product cost and your desired profit margin.
For instance, if a product costs $5 and the shipping fee is typically $2, you can charge $9 for shipping. In this case, you’re giving away the product for “free,” yet still making a $2 profit from each sale.
This strategy is highly effective for attracting impulse purchases and creating a sense of urgency among customers.
The cost-based pricing strategy involves calculating the selling price of a product based on its total costs, along with a fixed percentage markup.
To begin, determine the total cost of the product by considering expenses such as supplier purchase costs, shipping, and operational expenses. Then, decide on a fixed percentage markup, which could be based on industry standards (typically between 20% and 50%) or aligned with your dropshipping business's profit goals.
Let's use an example. If you find that the total cost of your product is $25, and you want to add a markup of 20%, the calculation would be:
Total Cost: $25
Markup: 20% of $25 = $5
Selling price: $25 (total cost) + $5 (markup) = $30
This approach ensures consistent profit margins while maintaining competitive pricing.
Perceived Value Pricing focuses on the perceived value of a product in customers' eyes, considering factors such as brand awareness, product quality, market positioning, and customer experience. It's essential to continuously adapt and reevaluate your pricing based on evolving market trends, customer feedback, and competitive analysis.
Keystone pricing is a straightforward strategy: you just double the price you paid for the product. This is an easy way to ensure you have a profit margin.
For example, if you purchase a product for $10, you’ll sell it for $20. Keep in mind that this strategy doesn’t account for other costs, such as shipping and taxes.
Tiered markup on cost involves setting different markup percentages based on the product’s cost. This allows you to use a higher markup on lower-priced items while lowering the markup for more expensive items.
For example:
If a product costs $1 - $10, apply a 100% markup.
If a product costs $11 - $100, apply a 75% markup.
If a product costs $101 and above, apply a 50% markup.
Adjust your percentages to fit your business needs and profit goals.
Psychological pricing is a method that taps into customer psychology to encourage more purchases. It’s all about setting prices that make people more likely to perceive the price as more affordable or of higher value. By applying specific price points, such as ending prices with the number 9 or 99, you can create a psychological impact on your customers.
Here are 2 different dropshipping pricing types regarding psychological pricing:
You can experiment with different price endings to find the most effective one for your target audience.
Suppliers manipulate prices every day in AliExpress. On some occasions, what you have to take into account when buying and how to make sure that what you're buying is really what you think. Here are 2 ways to guide you on how to review the product and shipping costs:
It is crucial to check everything and confirm that it aligns with your expectations. By clicking the color and size, you’ll arrive at the actual price for the product. For example, in the following image we've chosen the dress in size XS, the price will be US$ 12.42:
However, if we’ve picked the dress in size L, it will cost US$13.01:
Additionally, the price may change when you select the shipping location, as shipping costs are not the same for all countries. We suggest taking a look at these coupons before making your purchase.
In short, the final price will be the one that comes out at the time of payment.
As dropshipping product cost and shipping cost are two basic points that you may need to consider, Zopi allows you to check every possible cost and expected profit. Go to Zopi dashboard, navigate to the Imported products page of the Product Center, and click the Edit product button to access the Product Editor page. Next, access the Supplier’s variants tab and check the product cost and shipping cost for each variant.
IMPORTANT NOTE:
* The supplier's cost shows that it has been imported before. To check the most recent cost price, click the drop-down button in the Supplier column in Imported Products.
* To check the shipping cost, you need to determine the shipping origin, shipping destination, and shipping provider for this product.
Now we get to the best part. Zopi Pricing Rule feature enables you to set your own pricing rules for products which can be automatically applied to products while pushed to your online store. To set your own pricing rules, first, go to Zopi dashboard and access Price set up in the Settings & Billing page. Then turn on the button for the store you desire and choose from the three options: Basic pricing rule or Advanced pricing rule. Plus, you can set the Assign cents part if you want to use the psychological pricing strategy.
When you put a product on sale for a lower price or simply want to create urgency so the customers will have more willingness to add the product, you might want your customers to be able to see the original price, so they see the price comparison. To do this, you take advantage of the Compare-at-price function.
For more detailed steps to create your own pricing, check this guide.
By learning what you should consider when it comes to dropshipping pricing as well as some useful pricing strategies, you can know how to set smart product selling prices and take your online dropshipping store to new heights. So, as you embark on your dropshipping journey, keep these insights in mind, and watch your business thrive. Best of luck and happy selling!
Set Currencies
Set Pricing Rules and Assign Cent
How to Update Product Prices in my Shopify?
For any further concerns or requests, please do not hesitate to contact us via the Live chat window on the right screen or email us via support@zopi.io
In it, you'll discover:
Factors to Consider for Dropshipping Pricing
Best Practices to Price Products for Success
How Zopi Helps You Price Dropshipping Products
Final Words
Let’s dive right in!
Factors to Consider for Dropshipping Pricing
Here are some factors that you are likely to consider when you price your dropshipping products:
I. Product Cost
Product cost is the price that your supplier charges you. If you purchase products in AliExpress, your product cost is made up of a few different factors:
First-Time Price: This is the original price of the product. Keep in mind that if a product has various options (such as different colors, quantities, or finishes), the prices may vary. To determine the final price for the product, make sure you select the color and size.
Discounted Price: AliExpress frequently offers discounts as part of promotions or limited-time deals:
Current Supplier Discount: Suppliers may provide a discount, which reduces the overall price. The duration of this discount is specified.
AliExpress Coupons: New users receive coupons for their first purchase. These coupons can further reduce the price.
Supplier’s Coupons: Some suppliers offer additional coupons. Check the conditions for obtaining these discounts.
Currency Conversion: Suppliers on AliExpress typically calculate prices in US dollars (USD). If you view prices in other national currencies, they are approximate. The exact value of the item in your country’s currency depends on the exchange rate on the day of purchase.
II. Shipping Fees
Since the supplier handles shipping your products to your customers, please be clear about the shipping origin, destination and shipping methods details for each product so that you can figure out shipping costs correctly.
III. Other expenses or business costs
Consider these expenses such as marketing expenses, your Shopify/Zopi subscription, and transaction fees, etc when setting prices for your products. These are necessary business costs, so your price must cover these costs at the very least.
IV. Competitors' prices for similar products
Start by researching what your competitors are charging for similar products. Once you have a knowledge of your product competition level, you can set a price for your products more appropriately. If your competitors are selling similar products at lower prices, you should consider how to provide more value to justify a higher price. Conversely, if your competitors have higher prices, you may be able to win customers with lower prices.
Best Dropshipping Pricing Strategies for Success
I. Dropshipping Pricing Strategies for Low-Ticket Products ($0 - $10)
Free Plus Shipping Strategy
The free plus shipping model is an enticing method that involves incorporating shipping costs into your product price to offer "free" shipping to customers. To implement this strategy effectively, you should set a shipping fee that covers both the product cost and your desired profit margin.
For instance, if a product costs $5 and the shipping fee is typically $2, you can charge $9 for shipping. In this case, you’re giving away the product for “free,” yet still making a $2 profit from each sale.
This strategy is highly effective for attracting impulse purchases and creating a sense of urgency among customers.
II. Dropshipping Pricing Strategies for Medium-Ticket Products ($10 - $25)
Cost-Based Pricing
The cost-based pricing strategy involves calculating the selling price of a product based on its total costs, along with a fixed percentage markup.
To begin, determine the total cost of the product by considering expenses such as supplier purchase costs, shipping, and operational expenses. Then, decide on a fixed percentage markup, which could be based on industry standards (typically between 20% and 50%) or aligned with your dropshipping business's profit goals.
Let's use an example. If you find that the total cost of your product is $25, and you want to add a markup of 20%, the calculation would be:
Total Cost: $25
Markup: 20% of $25 = $5
Selling price: $25 (total cost) + $5 (markup) = $30
This approach ensures consistent profit margins while maintaining competitive pricing.
III. Dropshipping Pricing Strategies for High-Ticket Products ($30+)
Perceived Value Pricing
Perceived Value Pricing focuses on the perceived value of a product in customers' eyes, considering factors such as brand awareness, product quality, market positioning, and customer experience. It's essential to continuously adapt and reevaluate your pricing based on evolving market trends, customer feedback, and competitive analysis.
IV. Other Common Dropshipping Pricing Strategies
1. Keystone Pricing
Keystone pricing is a straightforward strategy: you just double the price you paid for the product. This is an easy way to ensure you have a profit margin.
For example, if you purchase a product for $10, you’ll sell it for $20. Keep in mind that this strategy doesn’t account for other costs, such as shipping and taxes.
2. Tiered Markup on Cost
Tiered markup on cost involves setting different markup percentages based on the product’s cost. This allows you to use a higher markup on lower-priced items while lowering the markup for more expensive items.
For example:
If a product costs $1 - $10, apply a 100% markup.
If a product costs $11 - $100, apply a 75% markup.
If a product costs $101 and above, apply a 50% markup.
Adjust your percentages to fit your business needs and profit goals.
3. Psychological Pricing
Psychological pricing is a method that taps into customer psychology to encourage more purchases. It’s all about setting prices that make people more likely to perceive the price as more affordable or of higher value. By applying specific price points, such as ending prices with the number 9 or 99, you can create a psychological impact on your customers.
Here are 2 different dropshipping pricing types regarding psychological pricing:
| Pricing type | How it works |
|---|---|
| Charm Pricing | Setting prices just below round numbers, like $19.99 instead of $20, to create a perception of affordability. |
| Prestige Pricing | Setting prices higher than the average market price to create the perception of higher quality or exclusivity. For example, pricing a luxury item at $999 instead of $900. |
You can experiment with different price endings to find the most effective one for your target audience.
How Zopi Helps You Price Dropshipping Products
I. Check Product and Shipping Costs
Suppliers manipulate prices every day in AliExpress. On some occasions, what you have to take into account when buying and how to make sure that what you're buying is really what you think. Here are 2 ways to guide you on how to review the product and shipping costs:
1. In AliExpress
It is crucial to check everything and confirm that it aligns with your expectations. By clicking the color and size, you’ll arrive at the actual price for the product. For example, in the following image we've chosen the dress in size XS, the price will be US$ 12.42:
However, if we’ve picked the dress in size L, it will cost US$13.01:
Additionally, the price may change when you select the shipping location, as shipping costs are not the same for all countries. We suggest taking a look at these coupons before making your purchase.
In short, the final price will be the one that comes out at the time of payment.
2. In Zopi
As dropshipping product cost and shipping cost are two basic points that you may need to consider, Zopi allows you to check every possible cost and expected profit. Go to Zopi dashboard, navigate to the Imported products page of the Product Center, and click the Edit product button to access the Product Editor page. Next, access the Supplier’s variants tab and check the product cost and shipping cost for each variant.
IMPORTANT NOTE:
* The supplier's cost shows that it has been imported before. To check the most recent cost price, click the drop-down button in the Supplier column in Imported Products.
* To check the shipping cost, you need to determine the shipping origin, shipping destination, and shipping provider for this product.
II. Price Your Products shown in Shopify stores
Now we get to the best part. Zopi Pricing Rule feature enables you to set your own pricing rules for products which can be automatically applied to products while pushed to your online store. To set your own pricing rules, first, go to Zopi dashboard and access Price set up in the Settings & Billing page. Then turn on the button for the store you desire and choose from the three options: Basic pricing rule or Advanced pricing rule. Plus, you can set the Assign cents part if you want to use the psychological pricing strategy.
When you put a product on sale for a lower price or simply want to create urgency so the customers will have more willingness to add the product, you might want your customers to be able to see the original price, so they see the price comparison. To do this, you take advantage of the Compare-at-price function.
For more detailed steps to create your own pricing, check this guide.
Final Words
By learning what you should consider when it comes to dropshipping pricing as well as some useful pricing strategies, you can know how to set smart product selling prices and take your online dropshipping store to new heights. So, as you embark on your dropshipping journey, keep these insights in mind, and watch your business thrive. Best of luck and happy selling!
Curious to read more? Check out additional articles:
Set Currencies
Set Pricing Rules and Assign Cent
How to Update Product Prices in my Shopify?
For any further concerns or requests, please do not hesitate to contact us via the Live chat window on the right screen or email us via support@zopi.io
Updated on: 13/12/2024
Thank you!