Costing - Query

daudi250

Member
Hi,

Just a bit curious on the topic of costing. I was wondering to know more about how you do the costing of your dropship store?

For E.g.

Product A ( i am selling for 15$)
Product A costs: $5
Shipping is Free
Your payment gateway fees: 0.5 cents
Marketing expense
Total expense
and so on

Just curious to know about what %age do you keep for marketing expense per product? For E.G 10% of the Selling price will be the marketing expense or etc.

Any ideas or suggestions?
 

Direct Webstore

Well-Known Member
Product A costs: $5
I'd charge about $8.
Most of my markups are closer to normal retail markups rather than the "over the top" drop-shipping markups. But I spread my profit across several stores. I don't need a single store to make HUGE profits all by itself.

But that's just me. Everyone is different and has different needs.
I live a simple life and am not greedy. I'm happy making enough for what I need. I don't need a Ferrari. Just enough to do whatever I want to do and go wherever I want to go.

I also believe in "Karma" and don't like ripping people off.

;)
 
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daudi250

Member
I'd charge about $8.
Most of my markups are closer to normal retail markups rather than the "over the top" drop-shipping markups. But I spread my profit across several stores. I don't need a single store to make HUGE profits all by itself.

But that's just me. Everyone is different and has different needs.
I live a simple life and am not greedy. I'm happy making enough for what I need. I don't need a Ferrari. Just enough to do whatever I want to do and go wherever I want to go.

I also believe in "Karma" and don't like ripping people off.

;)


What I mean is how to decide or workout on what margin do you want to sell your product for? Like I do my working on what cost i should sell the product for, so i can cover the cost of payment gateway charges and marketing cost and any other costs if associated.

For E.G a screenshot from my working below. This is how I work. If i am selling for $15, so i would be making about 2-3$ profit on it, after deducting all the expenses.

Screen Shot 2019-05-02 at 3.53.15 pm.png

Do you work this way? or just pull out the products and see what price its been sold and add your price and start selling it?
 

Direct Webstore

Well-Known Member
What I mean is how to decide or workout on what margin do you want to sell your product for? Like I do my working on what cost i should sell the product for, so i can cover the cost of payment gateway charges and marketing cost and any other costs if associated.
Personally, I think you think too much. Dropshipping has very low overheads. I've just set the pricing formula to give me about a 10-20% profit, set it and forget it. That's a bit of an over simplification though as my pricing formula has a decreasing scale from cheapest to most expensive. It's a model recommended by many out there in internet land. ;) Running 8 stores I don't have time to overthink it too much as I'm too busy doing the "real" work of writing blogs and making product videos for Youtube.

You have to remember ...

- If a product cost $1 and you charge $5 for it, or a product costs $95 and you charge $150 for it, how much difference is there in the amount of work you have done? None.

- How much difference is there in advertising costs for the two products? None.

- How much difference in shipping costs for you with the two products? None

- How much difference to manufacture and store the two differently priced products? None. (Because you don't)

You're thinking as if these products were manufactured, stored, handled and shipped by you with all the associated costs involved . They are not. You're just a middle man. Take a slice for yourself that you think is fair and stop worrying so much about it.

You're over complicating something that does not need to be over complicated. The default "Suggested" settings for the Pricing Formula is what the Alidropship staff use for their own stores. And their stores are very successful. But I personally think they are a bit high ... like I said above.

That's just my opinion.

Anyway, I've stated my look on it and don't have time to discuss it any further as I'd just be repeating myself. As far as I'm concerned, it's a pretty simple matter. Let's wait and see what others do instead so you can have an assortment of different opinions.

;)
 
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daudi250

Member
So do you use that $5 method for advertising?

How do you incorporate the cost of advertisement.

The above makes sense. Actually, I had bought some stock of Alibaba to start my business and late on my friend introduced me to this Alidropship plugin.. Since then I am using this plugin and have converted the store into a Dropship store. :D
 

Direct Webstore

Well-Known Member
So do you use that $5 method for advertising?
"$5" is a recommended starting price for a new ad on Facebook. If it does not work, you've only lost $5. No big deal. If it DOES work, then increase the money and run it again.

And if it does not work, then you obviously scrap it and make a new one and/or change the target audience. There's a bit of trial and error involved with a new niche and it's products. That's why you don't spend too much at first and start with $5.
 

Direct Webstore

Well-Known Member
How do you incorporate the cost of advertisement.
Like I said... I'm going to repeat myself if I answer that. Wait for others to put their 2 cents worth in. I've already said all I can say on the matter.

I had bought some stock of Alibaba to start my business
That's what a lot of dropshippers do after they have discovered a profitable niche. Drop-shipping first then importing in bulk and shipping yourself second.

Or some even combine the two. Like do 80% drop-shipping, but order in bulk a few really popular products that have been selling well and shipping them yourself. You make much better profit on the ones you ship yourself. Most of the Aliexpress sellers are middle men too. They get their stuff from Alibaba or https://www.1688.com/

;)
 

Direct Webstore

Well-Known Member
But at the moment I don't do any advertising at all. I'm running on 100% Social Rabbit power while I concentrate on writing articles and making product videos for Youtube for 8 sites! In a few months time when my blog writing and video making slows down, I may start advertising again and doing Instagram shoutouts ... which are better than Facebook ads.
 

daudi250

Member
How do you trust a person on insta :p I have gotten a few messages from People if i want to feature my products on their feed. When i had a look at them, it was like they purchased the likes and made up their audience. or used lame hashtags.

So far for me google ads are going better than FB ads. But i need to explore insta shout outs.
 

Direct Webstore

Well-Known Member
How do you trust a person on insta
Trial and error I guess. I've not had a problem yet. But I'm not advertising at all at the moment. It's also better to choose influencer's with a mid range numbers of followers. 100,000 to 500,000 or so. The ones with millions of followers are sick to death of their constant shoutouts so they're not as effective. They also cost more. There's a good blog about it in Alidropship's blog section.

So far for me google ads are going better than FB ads.
I've never use Google Ads yet. Eventually, in the future I may use them. Aren't they more expensive than FB Ads? (Depending on the keywords you use, I guess)

;)
 
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