1.1 Forecasting & Pricing

Selling what everyone is buying out there in the world is usually a terrible approach to take in choosing products to sell for your own dropship business. It’s best to sell more expensive, higher ticket items that are more specialized (niche related) than to sell lower cost, mass market, products. I recommend selling fewer products at a higher profit than a higher volume of products at a lower profit. I personally don’t want to build businesses that require more and more customer support. Instead I’d rather make more money doing less. Make sense right? Here is an example:

Let’s first assume my income goal is to make roughly $15,000 net income a month. Now we’ll follow the scenario of looking at the number of product units sold versus the gross profit made per sale when comparing the sell of tubes of toothpaste and chicken coops. You can choose any mass market product here and compare it to a hight ticket niche product. We’re simply going to use toothpaste and chicken coops okay.

Toothpaste retails for around $2 a tube and the wholesale varies around $1 depending on the brand. Toothpaste is something that almost everyone on the planet buys. It has extreme competition and the profit is very low.

High quality chicken coops on the other hand sell on average for $800 (wholesale price of $500) giving us a net profit of $300 per sale. Chicken coops do not have nearly the competition level compared to toothpaste and has a far higher profit margin.

When you do the rough math you can take the volume of sales multiplied by the profit. Keep in mind our $15,000 income goal. With chicken coops we get $300 X 50 sales=$15,000 compared to toothpaste at $1 X 15,000 sales = $15,000 Both approaches get us to our income goal but one gives us more freedom of time and the other puts us into a customer service nightmare.

Having 15,000 customers in any given month for a almost any new drop ship start-up business would be a horrible unless you had the staff to support it. And if you’re like most people and you’re just getting started, then selling low ticket mass market products is not the way to go. Now, with the chicken coops example we have 50 customers. That we can handle! We make the same net profit, plus we have more freedom of time!

Some of the other reasons to sell higher ticket items are:

1. getting paid traffic is far easier and affordable
2. you don’t have to process as many orders
3. you don’t have to higher more staff

Now, I’ll be teaching you in more depth about get targeted traffic (people who want to buy right now) coming to your drop ship store. For now though let’s show you just how many people you would need each month comping to your site when comparing the two products we shared with you above.

If we estimate that our site can convert around 2%, what that means is we can generate 2 sales every 100 unique visitors to our site. If we were selling toothpaste we would need

just understand that on average we see about 2 to 3 people buy a product from our stores for every 100 targeted visitors who come to our site. We’ll show you how to get  in future trainings

By now you should hopefully see the importance of selling higher priced niche products can give you the lifestyle you want most.

Other tips about pricing:

• Only choose suppliers that enforce M.A.P. pricing in place (minimum advertised price) so you don’t get caught in the trap of pricing battles with other competitors selling the same product online. These suppliers will tell you the minimum price you could sell their products.
• MAP for your core nice products should be $150 or more.
• Less expensive products can be add-ons and up-sells to your core niche product. Don’t offer your less expensive products in the main lime-light but instead offer these products to your customers as they are checking out.