Every dropshipper knows that pricing products correctly can be a challenge! Too high, and you scare off customers. Too low, and you’re not making enough to cover costs. That’s why I’ve compiled 9 expert-recommended, most-updated dropshipping pricing strategies that are perfect for 2025. Each one includes the best use cases, pros and cons, formulas, and examples to make implementation easy!
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9 Best Dropshipping Pricing Strategies for 2025
Let’s get straight to the point. I will discuss all about the most popular, most effective, and most applicable pricing strategies for 2025.
Don’t miss out! One of them might be the best dropshipping pricing strategy for your own business.
1. Keystone Pricing
- Best for: Beginners; general consumer goods with moderate price points
- Formula: Selling Price = 2 × Cost of Product
For those just starting out, keystone pricing offers a straightforward way to set prices. It works by simply doubling the cost of the product to determine its selling price. This ensures a 100% markup, providing a comfortable buffer for operational costs and profits. While it’s easy to apply, this method might not always align with your market’s competitiveness or the perceived value of your product.
Imagine you’re sourcing reusable thermos flasks from a supplier at $20 each. Using keystone pricing, you set the retail price at $40. This gives you room to cover marketing, shipping, and transaction fees while still leaving a profit margin.
However, let’s say competitors sell similar bottles for $35—your higher price might push customers to their stores. On the flip side, if competitors are pricing at $50, you could look like a bargain, even with a keystone markup.
2. Competitive Pricing
- Best for: Sellers in crowded markets like electronics or apparel
- Formula: Selling Price = Average Competitor Price ± Adjustment Factor
Rather than relying solely on cost, this strategy revolves around knowing your competition. By setting your prices close to—or slightly lower than—your competitors, you can attract shoppers who prioritize affordability. This approach is especially useful in niches where buyers compare prices before making a decision.
Consider you’re selling smartphone cases. Competitors have their prices ranging from $20 to $25. If you set your price at $24, you align with the higher end of the range but still appear competitive.
Or, you can price your products on the lower end to get an edge right from the moment customers search for products. For example, in the search results for portable chargers above, you will be most tempted to click on the product with the cheapest price.
However, it is crucial to make sure you still generate enough profit from the price, so calculate your costs carefully.
3. Cost-Plus Pricing
- Best for: Intermediate sellers; products with fluctuating costs
- Formula: Selling Price = Cost of Product + (Cost of Product × Markup %)
In cost-plus pricing, you add a predefined percentage markup to the product cost. This method is excellent for ensuring that every sale generates a profit. It’s particularly useful for products with variable costs, like seasonal items or goods affected by supplier price changes. However, it’s important to balance this approach with market demand and perceived value.
Suppose you’re sourcing premium leather wallets for $30 each. Adding a 40% markup gives you a selling price of $42. The profit margin is reliable, and this pricing model ensures you’re covering operational costs. If you’re selling these during the holiday season, when demand is higher, you might consider a temporary markup increase—raising the price to $50—to maximize profitability while leveraging seasonal interest.
4. Psychological Pricing
- Best for: All levels; products bought on impulse or everyday goods
- Formula: Selling Price = Just Below the Nearest Round Number
There’s a reason you often see prices ending in .99. Psychological pricing leverages human behavior to make prices appear lower than they are. For instance, a $49.99 price tag feels more affordable than $50, even though the difference is just one cent. This subtle adjustment can make a big impact, especially for impulse purchases.
Picture this: You’re selling a trendy desk lamp that costs $20 to source. Pricing it at $39.99 instead of $40 doesn’t seem like a huge difference, but to a shopper scanning multiple options, that one cent makes your product stand out as the better deal. Combine this strategy with attractive product descriptions and visuals, and you can increase conversions without sacrificing profitability.
5. Value-Based Pricing
- Best for: Premium brands; unique or high-quality products
- Formula: Selling Price = Perceived Customer Value
Instead of focusing on costs, value-based pricing considers how much customers are willing to pay. This strategy works well for products with unique features, strong branding, or perceived higher value, such as eco-friendly goods or handmade items. The challenge lies in understanding your audience deeply enough to determine what they value most.
Let’s say you’re selling eco-friendly backpacks made from recycled materials. The production cost is $30, but the sustainability angle allows you to price the backpack at $100 because customers perceive it as more valuable than a standard bag. To justify the higher price, you can emphasize features like durability, ethical production, and environmental impact in your marketing.
6. Anchor Pricing
- Best for: Established sellers; high-ticket or premium products
- Formula: Selling Price = Discounted Percentage of Anchor Price
People love a deal, and anchor pricing creates one by displaying a higher “original” price next to the actual selling price. This strategy makes the discounted price look more attractive, leveraging the buyer’s fear of missing out on a bargain. However, inflated anchor prices can backfire, so keep them realistic.
Imagine you’re offering a high-end smartwatch. Listing the “original price” as $200 and a current sale price of $150 makes the discount obvious and enticing. Customers feel they’re saving $50, even if your costs allow you to profit handsomely at $150. Ensure your anchor prices reflect real market value to maintain credibility.
7. Bundle Pricing
- Best for: Clearing stock or boosting average order value; small accessories
- Formula: Selling Price = Sum of Individual Prices − Bundle Discount
Grouping products together at a slightly lower price than buying them individually encourages customers to spend more. Bundle pricing is perfect for accessories or items that complement each other.
For example, pairing a phone case with a screen protector at a discounted bundle price not only clears inventory but also enhances customer satisfaction.
Imagine selling a phone case for $20 and a screen protector for $10. Instead of listing them separately, you bundle them for $25. Customers perceive this as a $5 saving and are more likely to buy both, increasing your average order value.
Or, on the same listing, include both individual items and bundled ones with the intention of pushing sales for the latter. Buyers can compare on their own and see that bundled options are a better deal, resulting in them buying more than just one single product.
8. Dynamic Pricing
- Best for: Experienced sellers; trending or seasonal products
- Formula: Selling Price = Base Price + Adjustment Factor
Dynamic pricing adapts to changes in demand, competitor pricing, or inventory levels. This strategy requires real-time monitoring and tools to adjust prices effectively. For instance, during a holiday sale, prices for high-demand items like gadgets can be increased, while slower-moving stock gets discounted to attract buyers.
Picture selling a trending gadget during Black Friday. Normally priced at $50, you raise it to $60 due to high demand. Conversely, you discount older inventory to $40 to encourage clearance. Dynamic pricing ensures you’re maximizing profitability while responding to market conditions.
9. Penetration Pricing
- Best for: New sellers; everyday products
- Formula: Selling Price = Cost of Product + Minimal Markup
When entering a competitive market, setting a low initial price can attract customers and build brand loyalty. This strategy sacrifices short-term profits for long-term gains, as you gradually increase prices once your customer base grows. Timing is critical here—raise prices too soon, and you might lose new buyers.
For a product costing $15, you might start with a $20 price to draw in customers, then increase it to $30 as your brand gains recognition. Combine this with excellent customer service and promotions to secure repeat buyers as you raise prices.
5 Expert Tips for Optimizing Your Dropshipping Pricing Strategy
Now that you’ve got the top strategies down, let’s take it a step further. As an experienced e-commerce consultant, I recommend these five tips to help you refine your pricing and make smarter decisions. These insights address common challenges and provide actionable advice to optimize how you price dropshipping products.
1. Leverage Pricing Tools and Dropshipping Price Calculators
One of the smartest moves you can make is incorporating pricing tools, especially dropshipping AI tools, into your workflow. A dropshipping price calculator can help you factor in costs like shipping, taxes, and platform fees while ensuring a desirable profit margin. Tools like Oberlo and Shopify’s pricing apps are user-friendly and allow you to experiment with different scenarios.
Using these tools not only saves time but also ensures your calculations are accurate. They’re especially handy if you’re unsure how to price dropshipping products across different markets or currencies.
2. Monitor Your Competitors Constantly
Your competitors’ prices are a goldmine of information. Regularly check what they’re charging, how they’re positioning their products, and whether they’re running promotions. Tools like Price2Spy or Terapeak can automate competitor analysis, making it easier to adjust your prices without constant manual research.
3. Incorporate Customer Feedback
Your customers are your best resource for understanding perceived value. Surveys, reviews, direct feedback, or just subtle feedback like the example below can give you insight into whether your prices feel fair, too high, or too low. Use this information to fine-tune your strategy.
4. Stay Flexible with Seasonal Adjustments
Seasonality can significantly impact purchasing behavior. During peak seasons like holidays, consider increasing prices to maximize profits. Conversely, during slow periods, discounts or bundled offers can help maintain steady sales. Dynamic pricing tools can help automate these adjustments.
If you want to automate pricing adjustments, tools like Prisync can be handy. You can easily set rules for the prices to automatically fluctuate according to market conditions.
5. Include a Cheaper, Relevant Item in Listings
A clever way to attract more clicks is by including a lower-priced, highly relevant item in your product listing. For instance, if you’re selling premium headphones, consider adding an accessory like a cable organizer or a cleaning kit as part of the listing. This allows the displayed price in search results to reflect the cost of the cheaper item, drawing in more potential customers.
Be cautious, though: only include items that are genuinely related to the main product. If a customer clicks expecting to purchase the main item and finds the low price applies to an accessory instead, they may feel misled. Such experiences can lead to negative reviews or loss of trust in your brand.
>>> Read more: Dropshipping Kitchen Appliances:15 Items To Start Your Business
Wrapping It Up
Building the perfect dropshipping pricing strategy takes time. I would recommend starting with one or two of these ideas, like using a dropshipping price calculator, and refine as you go. The more you experiment, the better you’ll get at finding prices that boost sales and profits.
