mark up

New Member
4 0 0

I just started up my dropshipping store, relatively new at this, for most products, what is a good markup amount to stay competitive but make money?

0 Likes
Trailblazer
151 8 31

I'm new at it too.  Still getting my store prepared to go public, but almost done and have a sizable products catalog.  It depends on the product(s).  I've looked up a ton of products on Amazon and ebay, and I've heard that suppliers are also using those sites to sell their inventory, so perhaps trying to be competitive with those prices is not wise in some cases.  For instance, if a supplier's product costs a vendor $4 through Shopify apps / dropshipping suppliers, and the same product is being sold for approximately $4 or less via ebay / Amazon, then try not to do a tiny markup simply to be competitive with those sites' lowest prices.  That's what I'm aiming at.  It's best to be competitive with local / regional retailers that are not online stores only.  For example, Walmart or Dunham's sports, or even a popular mall store.  It's not easy to discover products that allow a large percentage margin in the Shopify dropshipping suppliers' apps at times, but it is worth it in lieu of the marketplace price fluctuations and inherent competition with online selling.

So, for another example:

Oberlo supplier sells PRODUCT A at 8.74 per 1 item to the Shopify store owner
PRODUCT A is set at a default retail price of 12.99 per 1 item
Shipping costs about $3
I suggest increasing the price to greater than 12.99, yet below other prices seen for the same product online or in a non-virtual store
If that's not feasible, then set it higher and see if it sells.  But remember, selling 5 of a product at $50 is $250 gross profit, whereas 20 at $20 is $400 gross profit...so a smaller margin isn't exactly a worse profit scenario...depending on the supplier's listing price.

0 Likes
Community Manager
Community Manager
2117 128 271

Hi @crossflix,

 

Nick here from Shopify. 

 

This is a really good question. At the end of the day, it is up to you to price your products, but there are some great videos and blogs made by Shopify's partners Oberlo (who are experts in dropshipping) about setting up a pricing strategy to get the most out of your product. There are three pricing strategies which are good to research before setting the prices for your products. 

 

  1. Cost-Based Pricing 
  2. Competitor-Based Pricing  
  3. Value-Based Pricing 

Each strategy has both pros and cons depending on what situation you are in and what product you are selling. The Oberlo team made a video based on this going through each strategy in some more detail as well as a blog post here.  

Another great blog post which could offer some useful advice for you by the content team at Oberlo is The Secret to Pricing your Products. This post goes through a variety of different reasons for setting a price and why. Last but not least, this is a very common question and it could be worth your while getting involved in the conversation within the Oberlo community here also.  

 

Hopefully, this helps and gives you some ideas of how to price your products going forward. 

 

All the best, Nick

Nick | Social Care @ Shopify
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

0 Likes

I believe what you're looking for is a profit margin. A healthy profit margin for dropshipping is normally around 40%-60% if you're looking to stay competitive. When you determine the right margin for your business, be sure to consider all of your expenses like:

  • Shopify plan
  • Transaction fees
  • Product costs
  • App subscriptions

If you plan on doing paid ads, that'll be another cost to consider when determining the right margin for your business.

ProductPro connects your Shopify store with thousands of high-quality products available for dropshipping from our trusted supplier network. Enjoy automated fulfillment, quick turnaround, great margins, and an extensive product selection.
0 Likes