Why You Should Avoid Underpricing Your Products When Dropshipping

Source: DHgate, Tag: Dropshipping

Dropshipping gives you time to focus on making a profit. Find out why underpricing your products may actually be damaging your business.

Dropshipping has revolutionised the way businesses buy and ship products online and allows e-commerce business owners and entrepreneurs to sell goods without having to carry inventory. Instead, the product manufacturer creates, packages, and directly ships the product out to your customer for you, leaving you to run other aspects of your business, such as customer service, marketing and developing new products.
Another aspect of your business that you will have more time to focus on with dropshipping implemented is selling. The whole point of starting an e-commerce business after all is to make a profit (while also providing worthwhile products and value for money for customers) and dropshipping allows you time to do plenty. But while providing value for money is essential in creating a successful online business, it doesn’t mean that you have to undervalue your products.
Always aim for profit while delivering good value
Once you choose to utilise dropshipping, you will find yourself with more time to improve product quality and invest in newer and better items to sell. When it comes to sourcing new products, the cost of goods is usually relatively close to the wholesale price. This allows the buyer to sell products at market value while making a profit. But how much of a profit you make will all depend on how much you end up selling your products for.
When you price your products, you should really be focused on the quality of the product and not just concerned with how cheaply you can sell it for. Selling an item cheaply does not necessarily mean that more will be sold. On the contrary, you may find that your price point is so low that you don’t see any return in your investment at all, which is why it is essential that you don’t underprice your products. For instance, if you are selling a $4.99 product, you really should be selling it for $19.99.

Not only does this equal a $15 profit for you as the seller, but you are also providing a product that is of good value (without being overly expensive) and also of good quality.
Don’t be cheap
Another aspect that you should consider when pricing your items is not to appear too cheap. While affordable products are indeed a major attraction to a lot of customers, appearing too cheap can also potentially give the impression that an item is of bad quality, hence the overly cheap price. Many online marketplaces already have a reputation for producing cheaply-made products for a low price, which is where the phrase “You get what you pay for” originates from, meaning that if a customer pays little to nothing for an item, they can expect little in quality as a result.

By providing good quality products for completive prices, you are ensuring that not only do you receive a profit in return, but customers are left satisfied by paying a little bit more for a good quality product. Now you are dropshipping, you will have the necessary time to experiment with price points and find a price that is right for you and your business.
Don’t feel pressure to underprice products
Dropshipping gives you more time to monitor the competition and see what they are doing better (or worse) then you. There are often many pressures that can occur while competing with rival competitors in a saturated digital marketplace. One of those pressures is feeling the need to underprice your products when other businesses are doing the same. While it may be tempting to lower your prices because every other business is doing the same, as long as your prices are fair and within market value, you should always aim to maintain a profitable price point, regardless of what other businesses are doing.