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If you are a dropshipper or online seller, one of the common problems you may have is pricing. Perhaps, you may be asking, “What price should I put on my products?” or “Am I overpricing or underpricing my products?”

Your price can determine the success and failure of your business. Depending on the products you are selling, you should have a flexible pricing strategy. Your approach can vary as it involves testing what works better and what’s not. 

Your pricing strategy should be aligned with your customer’s purchasing behavior and your desired profit margin. In this blog post, let us look at the best strategies on how to price your products correctly so that you can achieve optimum success.

1. Fixed Dollar Markup vs Fixed Percentage Markup

The first step is to determine the average costs of your products. Assuming that your products cost around $12, adding a 15% percentage markup, that would be $1.8 per product. 

On the other side, if you are using a fixed dollar markup of $3 or $5 per item, you are earning more profit. This pricing strategy is ideal if you are selling low-cost products.

2. Tiered Markup on Cost

This approach uses a combination of markups of both lower and higher-priced products. The idea is to have an edge over your competitors particularly if you have similar products.

Most sellers use a set tier markup to save time but it’s better to have varied pricing.

For example, both of you are selling computers and accessories.

Let’s assume the computer costs $600 and the accessories cost $250.

Your competitor used a set tier of 30% markup. 

$600 (30%) = $780   Profit: $180

$250 (30%) = $325   Profit: $75

You use a tiered markup where you put 25% markup on a computer and 40% markup on accessories. 

$600 (25%) = $750   Profit: $150

$250 (45%) = $362   Profit: $112

This simple change can significantly affect your sales. When a customer looking for a computer, visits different stores and compares prices, he will likely purchase from your store because you have a lesser markup. And even if he has to spend slightly higher on accessories, the customer is still happy because he gets the computer at a cheaper price than other stores.

The idea is to add a lower markup on higher products and a higher markup on lower products. These price levels attract customers to the shopping cart and make a purchase.

3. MSRP (Manufacturer’s Suggested Retail Price)

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If you want to avoid price wars, setting your price based on MSRP is an ideal choice. This allows you to be competitive and still maintain a decent profit. The main selling point here is the discount provided by the manufacturer. If the MSRP is $100 and you have a 15% discount, it will not be very difficult for you to sell. You are still making a profit while ensuring that consumers are paying the price they expect. 

4. Psychological Pricing

Perhaps, you have seen a $9.99 price shown in convenience stores instead of $10. This cent difference plays a trick to make customers believe that they’re getting a lower price. This pricing method is known as “odd-pricing” where you use cents with 5,7, or 9 ending values. Rather than selling your product at $10, you can price it at $9.99, $9.97, or $9.95. You can see this approach in most e-commerce stores. The few cents difference can give you an edge over the competition.

5. Discount pricing

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It is a pricing method where you price your products high and use discounts to attract buyers, making it seem that they are getting the best deal. For example, you mark-up a product at 50% and offer a special coupon or discount sale at 25%, you are still getting a 25% profit. 

When offering discounts, make sure that you start with higher prices so that you still have a wiggle room to be flexible with your prices. If you start at the lowest price you can sell it, then you will not get enough profit if you sell it at a discounted price.

6. Shipping Markup vs Price Markup

Since you need to sell a product at a competitive price, you are taking into consideration of your competitor’s prices as well. Store owners don’t want to overprice their products as it can turn the customers away. With this, sellers lower the cost of the product and add a hidden charge on shipping costs.

Others offer a free shipping promotion by pricing the products high enough to also cover the shipping costs. Both are good methods but you need to study the market and customer behavior. Are they preferring lower pricing or want to save shipping costs? Conduct a survey and base your pricing strategy on the results.

Wrapping Up

There is no best pricing strategy. Different products have their most appropriate pricing methods. To be successful, you need to constantly study your competitors and your target audience. Don’t be afraid to change your price approach. Sometimes it needs a few tweaks to find the right price that will attract your customers to click the add to cart button. 

Email marketing is one of the most underrated online marketing methods. In e-commerce businesses, it is not sustainable enough to just rely on your website and social media.

Unlike social media in which you are presenting your message to a broad audience, email marketing offers you one-on-one communication with your audience. Email messaging, when done right, will help you retain existing customers, and generate new ones.

Important Tip:

Before crafting your email marketing campaign, you need to have a thorough understanding of what a sales funnel is. A sales funnel is your lead magnet where you capture customer info to build your email list.

It can be in a form of sign-ups, free gifts, discounts, contact form submission, abandoned carts, purchases, and more. 

TYPES OF EMAILS

1. Welcome Emails

Keeping your online visitors engaged with your brand is vital for e-commerce success. Welcome emails provide the first impression that you care for your customers.

Once someone signs up or agrees to be part of your mailing list or newsletter, you should send out a welcome email thanking them for taking action. Make your first email memorable.

Instead of bombarding them about your products and services, try to keep the message more personalized. Focus on giving value so that the recipients will not lose interest. Offer a freebie, discount code, or some extra incentive whenever possible.

2. Abandoned Cart Emails

Every abandoned cart is a potential loss in sales. If you don’t have an email strategy for it, you cannot expect to recover sales from your potential shoppers.

Shoot them an email within the first hour of cart abandonment. Set up a campaign trigger that re-engages your shoppers who do not complete the checkout. Time is the essence here. The slower you send the email, the lesser chance for lead recovery. 

You can offer free shipping, discount codes, or any promotional offer in the email. Depending on the number of clicks and results, you can determine the reason for cart abandonment. This data will help you strategize better and create offers more aligned to your customer’s purchasing behavior. 

3. Post-Purchase Emails

Marketing does not stop after a customer makes a purchase. The goal is to make them repeat buyers. With this, you craft a post-purchase email thanking them for the products they bought. 

Saying “thank you for your purchase” can increase your customer’s trust. By nurturing your new customers, you are giving them lifetime value. Acquiring new customers is less expensive than retaining existing customers. Never forget to thank your customers for every made purchase. 

4. Engagement Emails

Engagement emails are important to keep in touch with your customers. The idea is to make customers love your brand without being too pushy. 

You can also send email updates about your new product offerings or a link to a blog post. This will help build traffic to your website and re-engage your customers with your content and products.

5. Promotional Emails

This is a type of email where you grab the customer’s attention by announcing new products, events, or special sales. According to statistics, sending “price decrease” leads to a higher click-to-conversion rate when doing promotional emails.

Send out emails for new products, sales, discounts, and holiday promotions. Spread the word to all your customers and let them know about your promotions and offers.

Product descriptions. What are they? Product descriptions are one of the most important elements of a product page. However, most online store owners do not put the effort into writing product descriptions. We get it. It’s time-consuming and tiring to write product descriptions particularly if you have thousands of products.

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This is why the majority of store owners skipped this part. What are they doing is just copying the description provided by the supplier. If you aim for higher conversions and sales, you should not copy and paste from your supplier or Aliexpress. A lot of dropshippers do that, expecting they will get rich the next day. The result? Low traffic and little to no sales.

Things to Consider when Writing a Product Description

1. Define your Target Buyers

Your buyer persona dictates your writing tone. What is your niche and who are your ideal buyers? If you are selling to professional people, it is better to have an authoritative writing voice. If your audience is teens and average people, you can consider writing informal and adding a bit of humor to spark interest and attention. 

2. Be Informative

Don’t make potential buyers crave more info. Consumers need to know important information about the product they want to purchase. If you are not providing that, you are leaving them with tons of unanswered questions in mind. 

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Include all the specifications and features of the product you are selling. There is nothing wrong with writing a detailed product description. What are the dimensions and measurements of the products? What problems does it fix? What are the benefits that it provides to the buyers? Make sure you outline this information in your product description. 

3. Make it Easy to Read

Choose a writing format that is scannable. Divide paragraphs into small chunks for easier readability. Instead of writing long paragraphs, you can use bullet points when explaining product features and benefits. Make proper use of sentence breaks and spacing. 

When possible, keep your product description format consistent. Avoid long sentences and always check grammar and spelling. Run some advertisement tests and see how your product description performs. You can always tweak and change it based on the conversion rates.

4. Remember SEO

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Take note that when writing product descriptions, you are writing both for the customers and search engines. Optimize your product page and include target keywords that your customers are searching for. 

This will help your products increase online visibility and appear high on search results pages. By understanding Google’s algorithm and optimizing both content and product images, there’s a huge potential that you will get high traffic to your dropshipping store. 

5. Use Social Proof

If you have social proof or a product review to share, be proud to include it on your product page. 89% of consumers worldwide are reading product reviews before making a product purchase. By sharing social proof, you are building more trust and credibility with your store visitors. This also leads to an increase in sales and customer base. With thousands of competitors today, having customer reviews on your product page can make you stand out against the competition. 

If you are running an online store, a website will keep it open 24/7. An e-commerce store without a website is like a brick-and-mortar store without signage and billboard. Your customers will not know that your business exists.

A business website is vital for your online success. Thus, you must put effort and proper planning to use its advantage to the maximum. If you already have a website for your e-commerce store, track your traffic and conversion rates.

If you think your website is not performing well, then you should check if you have done website design mistakes. A poorly-built website that does not provide you enough sales might consider a revamp.

Here are the web design mistakes you should avoid:

1. Lack of responsive design

A responsive website means that it is adaptable to multiple devices. If your website is designed for desktops only, you are missing a lot of potential customers. Did you know that internet search queries are dominated by mobile phones?

Ensure that your website’s user experience is consistent across mobile phones, tablets, and other devices. 60% of online shoppers use their smartphones when looking for a product. If your website is not responsive, you are not expanding your audience reach. 

2. Poor Design Elements

The first impression lasts. If you want to capture the attention of your visitors, you need to create a recognizable brand image. Choose a clean and professional-looking theme and be consistent with the look and style.

Avoid using too many colors and choose fonts that are easy to read. Playing with complicated and mismatched designs will confuse your web visitors and give them reasons to not come back. 

3. Complicated Navigation 

Navigation means giving convenience to your visitors when surfing your website. If a customer lands on your website and has a hard time finding your product pages, clicking several buttons, and going to the wrong places, it will build a bad user experience. 

As much as possible, reduce your user’s scrolling and clicks just to find your product and read information. Do you have product categories and advanced search options? Not anticipating your visitor’s expectations can divert them from shopping and purchasing.

4. Boring Images

Images speak a lot about your product. If you are using low-quality and boring images, your customer will feel that your product is not worth giving attention to. 

Bear in mind that when shopping online, your customers cannot physically touch the product. They rely on pictures and videos. It may seem okay to use the product images provided by the manufacturer but if you can photograph the products and optimize them yourself, that could be better. 

Bad images allow your customers to think twice, making them leave your website – a loss on your potential sale. 

5. Not Enough Customer Support

In this digital world, people demand an immediate response. We do not want to wait for hours just to get information or assistance about a product.  It is not enough to post your email address on the website and have customers email you if they have a question or problem.

An FAQ section answering the most common questions is helpful. You can also integrate a chatbot to handle specific queries or even have a live chat to support your customers in their purchasing journey. Customer convenience is critical. Providing them with the help and assistance they need improve the credibility of your business.

6. Inefficient Shopping Cart Design 

One of the primary reasons why online shoppers abandoned their carts is becuase of the complicated checkout process. The shopping cart design should allow your customers to easily add/remove products, change quantities and variations.

An effective checkout process should include:

1. Checkout

2. Delivery Details

3. Payment Details

4. Confirmation

7. Lack of Payment Options

Offer multiple payment options to your diversified customers. Shoppers dislike too many steps and screen pop-ups at checkout. This is annoying and uncomfortable. If possible, do not redirect the payment option to a third-party site. Customers feel more secure making payments on your site.

Provide payment solutions that give flexibility to the users – whether they want to pay via PayPal, Visa, Mastercard, AmEx, and other options. Catering to your customers’ different preferences leads to a hassle-free checkout. 

Although dropshipping is one of the simplest business models to follow, the path to success is not always easy. Everyone makes mistakes along the way and they are not inevitable. Thankfully, you can reflect on the experiences of others and avoid repeating the same mistakes.

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Many online entrepreneurs assume that dropshipping business is a low-risk business. However, like any other business, one poor decision can be costly. To minimize risk and avoid suffering pitfalls, below is a list of common dropshipping mistakes to learn from.

1. Picking the Wrong Niche

A niche is a specialized segment of the market for a particular kind of product or service. Several dropshippers made this mistake early on as they thought that it was best to sell trending items. They sell hot products from different categories which ended up marketing to a broad audience. You can’t be selling electronics and baby’s clothing at the same time (unless it’s a general store).

Pick a niche, stick to it, and test it. If you are selling kitchen accessories, sell complementary items such as baking tools rather than adding women’s jewelry to the mix.

2. Spending too much time choosing a product

You have to keep up with the market trend and use time wisely. A certain product may be selling now but in a few months, not. Spending too much time choosing the best product can put you in a state of analysis paralysis.

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By being too indecisive and seeking more information, you are letting go of the days that you could have made a sale. Once you’ve done enough product research, it’s time to take action and commit to the product.

3. Relying on one Supplier

So you’ve found a great product in Aliexpress and contacted the supplier. Then you both agreed to the dropshipping agreement and then you leave your entire business to them. That can spell a lot of issues.

There’s a high tendency that suppliers can run out of stock, go out of business, or have some difficulties. This can lead to a loss of sales on your part. You will be dealing with a lot of cancelled orders and fulfilment issues and left scrambling to find a replacement supplier. To avoid this scenario, partner with multiple suppliers for your products when possible.

4. Bad Website Design

Think of a website as your primary salesperson online. What do your customers see when they visit your website? Since your website is your storefront on the internet, it should be properly structured to attract customers.

Shopify is one of the best e-commerce platforms that dropshippers use to create an online store. Imagine your customers landing on your website only to be annoyed by pop-ups, complicated design, and incomplete information. A simple and professional-looking website gives credibility and a good shopping experience.

5. No Marketing Plan

Don’t assume that once you have built your website, customers will come instantly. With hundreds and thousands of stores out there, you need to create ways to stand out from the competition. Social media is a powerful channel to reach a target audience.

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You can set up Facebook and Instagram pages for your online store. Set up a budget for paid ads and run promotions and advertisements for your business. Make sure that your audience can find you not just on your website but other channels as well.

6. Pricing Problems

It is a bad idea to underprice and overprice your products. It is important to keep an eye on your competitor’s prices and keep your pricing competitive. Determine the right mark-up and profit margin. The pricing should be comfortable for the seller and the buyer. In this way, you won’t push customers away while ensuring you have enough profit.

7. Not caring about SEO.

There are no shortcuts to online success. Many dropshippers invest little time to optimize their stores. SEO may require massive time and effort, but it will pay off in the long run. The information you put on your website must be unique and relevant.

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When writing product descriptions, try not to copy them from the manufacturer’s provided data. Instead, spend time writing engaging descriptions and include keywords that your customers are searching for.

8. Poor Customer Service

You may have a winning product but if your customer service is poor, your sales will go down. Are you responsive to your customer’s queries? In a saturated e-commerce market, providing good customer service can give you an edge.

Providing necessary information about a customer’s needs on time makes them feel that you care about them. That experience will keep your customers to keep coming to your store and patronizing your products. Customer referrals work better than paid ads.

9. Poor Branding

Branding your store is crucial to getting people to trust your brand and buy your products. Since you have competitors who are selling the same product as yours, adding branding to your packaging and labels can make a big difference.

This makes your customer remember your brand. They recognize you as a reputable seller who handles their products with care and attention. You can contact your supplier to arrange a private label and create your own brand that people will not forget.

10. Having Unrealistic Expectation

Dropshipping is not a “get rich quick” scheme. If you are not patient, it is not for you. Understand that dropshipping is a long game and it requires a lot of learning experience. Some people who failed are the ones who just set up their website and wait for something to happen. They made a few sales and then quit the next month.