To operate a profitable dropshipping business you need to price your products higher than what your supplier charges you. To correctly calculate the product price you need to calculate your total cost and then check the similar product prices that your competitors are selling.
On this page:
Review and calculate your total cost
The first step in pricing your products correctly is to calculate your total cost. You need to consider the following costs when pricing your products:
This is what you pay to the supplier.
This is what you pay for the shipping method that you select. Some shipping methods might be free.
This is what you pay for your marketing campaign. This cost depends on the country you’re advertising to, the length and audience of your campaign.
From 5 USD per sale
Recurring store maintenance fees
These are fixed monthly or yearly fees such as Shopify subscription, Shopify apps, and domain fees.
1 USD per sale
One-time store setup fees
These are your one-time store’s fees such as the theme price and logo design. You can use a free theme and design your logo by yourself
From 0 USD
Transaction and credit card fees
Some payment gateways and credit card providers might charge you fees per transaction.
Varies per payment gateway and credit card provider
Depending on where your business operates you might need to pay taxes for the products you’re selling.
Varies per country
In the above example, the total cost is around 16 USD. To make a profit you need to increase your product price and sell it for more than 16 USD. To make sure that you don’t price your products too high or too low, you need to research your market and competitors.
Research your market and competitors
After you calculate your total cost, then you need to research how much similar products cost in the country you’re targeting. This way you offer fair product prices for your customers and your business, and find a potential product price for your product.
You can also research different countries to find the most suitable for your business and products. Some products might be trending more in specific countries. For example, customers in Italy might pay more money for ceramic planters than customers in the United States as plain ceramic planters are on the rise due to local influencers.
Find similar products
You need to find multiple competitors that are selling similar products in the country you’re targeting and note down their product prices.
For example, if you want to sell ceramic planters, then you need to find at least 5 competitors that sell ceramic planters and note their product prices. Let's suppose you find the following product prices for similar planters: 35 USD, 30 USD, 40 USD, 39 USD, and 44 USD.
If you can’t find any competitors in your target country or you’re selling a very niche product, then try to think how much money you would be willing to spend on the product you’re selling. You can also ask your friends and family to give their potential product prices, and then calculate the average product price.
After you find product prices for similar products, then you need to calculate your product price.
Calculate your product price
To calculate your product price, you need to find your average product price on the market.
You need to add your competitor product prices into one value and then divide it from the number of competitors you checked. For example, let's suppose you found 5 competitors that offer 5 different product prices:
In this case, your average product price on the market is 37.6 USD. This is your ideal product price, so you don’t sell your product too high or too low.
To recap, your total cost is 16 USD and your product price is around 38 USD. This means that you're making around 22 USD profit.
After you add a product to your Oberlo admin, then you can adjust its price. Learn more about adjusting product prices.