How to Price Your Products for More Profits

50% markup? 100 mark up? What is it?

When it comes to pricing your products, everyone has their own method.

Today I will show you my method when it comes to pricing products on my online store.

It is important to get your pricing correct from the beginning before starting any paid marketing, whether it be Facebook Ads or an Instagram shoutout.

I made the mistake of pricing my products too low which affected my profit margins and cash flow.

Don’t be afraid to experiment with different markups. You would be surprised at the prices people are willing to pay!

Here’an example:

I’m selling this product for $59.99.

Cost price is $25 per item from our supplier. That is 41%

It costs $12 to convert a customer. That is 20%. Total costs are 61%.

Which leaves us with 39% of profit, $23!

Think about how much profit you can make if you were able to sell this product with upsells or bundles. You can also send out emails to your email list to maximize your ROI.

An email list is an asset to the business which generates revenue without spending any money on advertising. How cool is that!

Low Ticket vs High Ticket Product Pricing

There are thousands of products which you can find on websites such as Aliexpress which you can sell for big profits.

When choosing a price for your product, you must think how much a customer is willing to pay. Think of the perceived value of the item.

You can find plenty of products which cost around $2 which you can sell for $30 on your store. That’s $28 dollars you can potentially make in profit which can reuse that money for Facebook or Google Ads.

Bonus tip: When product researching, I usually look for products around the $10 mark. This makes calculating my expenses much easier.

Here is an example:

Cost price of the item: $10

Facebook ad conversion: $10

If you’re just starting out with dropshipping, I recommend spending a bit more on ad costs, around 25% – 30%.

Sell to customers for $40, this leaves you with $20 in profit.

Rule of thumb…

Cost Price $5-$9.99Sell for $20
Cost Price $10-$14.99 – Sell for $25+
Cost Price $15-$20 – Sell for $50+

At the end of the day, business is all about profits. There’s no point running a business if you are not generating any profits.

You want to spend less in ad costs and maximize your returns for your efforts.

If you like to learn more E-commerce marketing strategies, click here to check out my review of eCom Elites by Franklin Hatchett.

Pricing Strategies

Bundle Pricing

Bundle pricing allows your customers to purchase more than one product for a single price. You may have seen this pricing method when shopping for t-shirts, socks and underwear.

The gaming industry thrives on increasing their gaming console sales by including games in a bundle.

Pros: This pricing strategy can increase the perceived value of a product. It can increase sales and profits.

Cons: It can create difficulty in selling individual products as customers might not want to pay a higher price for individual products.

Free Plus Shipping

Free plus shipping is a very popular pricing strategy used by many drop shippers in 2018.

A business offers a product for free while the customer will have to pay for shipping.

Profit is generated by inflating shipping prices. This strategy works best when products are between $1 to $10.

However, free plus shipping may not work as well for higher priced products. For example, customers will be skeptical if you were to sell a drone and charge $100 for shipping fees at checkout.

Pros: The word FREE has been proven to grab people’s attention. This works great on social media platforms like Facebook and Instagram when customers are scrolling through their feed.

Cons: This pricing strategy can only be applied to certain products within a price range. It is not a good idea to use free plus shipping on more expensive products.

Psychological Pricing

This pricing strategy is used in almost every business. It relates to setting the prices of your products just a little lower than rounded numbers.

For example, $9.99 would seem much cheaper than a product for $10.00. Both prices are the same, however, this pricing strategy aims to attract customers on an emotional basis rather than rational.

Pros: This pricing method can trigger impulse purchases. Customers will think they are receiving a bargain.

Cons: If you own a luxury brand, it can be harmful not to use whole numbers when pricing your products. For example, $10,000 instead of $9,999.

Discount Pricing

Discount pricing is used by businesses to sell products in high quantities at a cheaper price. Customers love discounts and bargains.

Pros: Very useful for driving traffic and sales. It is also a great way to reward your loyal customers so that they keep coming back for more!

Cons: Customers can

Below Competition

This pricing strategy is based on your competitor’s product prices which you can use as a benchmark to price your products lower than theirs.

This method can help attract your competitor’s customers to your store.

Pros: This strategy works really well if you are able to lower your cost price per unit. This can be done by negotiating with your suppliers.

Cons: Can affect your profit margins if you’re just starting out.

Above Competition

This is the opposite of below competition strategy.

You can price your products just a bit higher than your competitors which you can then market it as a premium to customers.

Pros: Can give customers an impression of high-quality products because of the price.

Cons: Customers can view your products as overpriced if they are able to compare yours with a competitor if they are offering a cheaper price.

If you like to learn more E-commerce marketing strategies, click here to check out my review on eCom Elites by Franklin Hatchett.


Pricing your products too low will affect your profit margins and will slow down your progress when you’re trying to scale the business.

With cash flow problems, it might be a bit more difficult to cover your expenses and sustain your business in the future.

But don’t waste too much time finding that perfect number. The price you set the first time won’t be the same in the future.

It’s also a good idea to experiment with different price markups to see what your customers are willing to pay.

Leave a Comment