Determining the selling price of a product

There are many factors you should take into account when setting what price you'll charge your customers for a product you've obtained through AliExpress.

Product cost

How much the product will cost you will obviously be a factor in how much you sell it (you don't want to sell for less than you're paying for it), but it gives you other indicators too.

You can't normally expect to sell a product that costs £1 on AliExpress for £100 on your own store.

A general rule of thumb used by a lot of drop shippers looks something like the below.

For products that cost above £20 you should normally look to sell at a 2.5 or 3.0 markup.

All products are different however, depending on the perceived value the customer has.

Shipping costs

Your products will be coming from destinations in the Far East, mostly China/Hong Kong. You'll sometimes pay more to suppliers to ship to you from these destinations than you would normally charge your customers for shipping. You may want to consider 'absorbing' some of the costs of shipping within the product price, and instead having a low (or even free) delivery cost for your products.

Product type & quality

The type of product and it's quality will also have an effect on your expected markup. A low quality product can result in low customer satisfaction (particularly if you attempt to sell at a high markup) which can lead to refund requests, chargebacks and poor customer satisfaction in the form of bad reviews.

It's always a good idea to buy a sample product first to see what the quality is like.

Seller reliability

Not all merchants on AliExpress are as reliable as you'd expect. Whilst you can probably always expect for the order to be fulfilled and to receive the product, sometimes you may not do so, sometimes the seller may have made either an unintentional, or deliberate, mistake when listing the product on AliExpress and the delivered product might not be the same as the one advertised.

Sometimes merchants on AliExpress will run out of stock for an item unexpectedly and send a similar one out instead (rather than cancel/refund your order). So your customers might receive a substitute product and complain/request a refund.

You'll need to build in a healthy margin within your selling price to take account of the fact that you might have to give refunds to some customers or order the product again.

Marketing costs

Marketing will usually be your biggest cost (aside from your time). Marketing costs can be difficult to judge when you first start selling a particular product line. Don't overestimate your likely conversion rate as this will lead to a higher than expected marketing cost per product sold.

Website costs

Your website costs should usually be limited to the cost of your ShopWired account and the cost of your DropWired account (if you're not using the free for life DropWired plan).

The total cost of providing your website should be divided between the expected amount of units you sell so you know what portion of the selling price of a product will contribute towards your website costs.

Required profit

You are in this to make money.

When working out required profit, merchants often devalue their own time and don't take into account that if someone else was doing their job for them they'd also want to make some money on top of the wages they'd have to pay that other person.

Required profit = cost of your time + additional profit