Factors to consider while pricing the product

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Tourist
16 0 1

Hello

While pricing products what all factors needs to considered ? I am taking into account taxes and shipping. Is there any additional costs that I will need to consider ? I am a new bee to this. 

Thanks,

Label By H

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Shopify Staff
Shopify Staff
584 40 88

Hi @labelbyh

Ren here from the Shopify support team - happy to help you out here. 

It sounds like you're referring to pricing drop-ship products however the information I have is relevant across the board whether you're dropshipping, using Print-on-Demand or making your own products. 

Some of the top points to consider when pricing a product are: 

  • The extra value you provide - Building a business takes time, effort, and money. Any content that you create, unique combinations of products that you find, or extra customer support that you offer can all increase the value of your products. The resources that you invest and any additional value that you provide to your customers should be reflected in the pricing of your products.

  • Other expenses or business costs, such as marketing expenses, your Shopify subscription, and transaction fees - Consider these expenses when setting prices for your products. These are necessary business costs, so it's important your price covers these costs at the very least.

  • Competitors' prices for similar products - Looking at stores that sell similar products can help you determine the average price of the products you're selling. 

You can find these points and more in-depth details on our Strategy for Pricing page. 

 

Additionally, I would recommend reading over our Blog post entitled How to Price Your Product. A third resource blog, Pricing Strategies goes over a simple formula you can use to calculate your pricing. The formula is: Retail Price = [(Cost of item) ÷ (100 - markup percentage)] x 100

For example, you want to price a product that costs you $15 at a 45% markup instead of the usual 50%. Here's how you would calculate your retail price:

Retail Price = [(15) ÷ (100 - 45)] x 100

Retail Price = [(15 ÷ 55)] x 100 = $27


Can you tell me a little more about your products? Have you begun selling yet or are you at the beginning stages with your shop? 

 

Ren | Social team @ Shopify
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