To calculate your sale price, you should first calculate your cost price, which is the total amount of direct and indirect expenses incurred in the sale of your product.
Sale price = cost price + desired gain
Several factors need to be taken into consideration when establishing your sale price. Here is a list of the most important points that your calculation should take into account:
1. Direct expenses
Naturally, the starting point in your calculation is the cost of purchasing your product. If your supplier applies discounts to their products, always take into account the original price of the product so that there is no loss of margin if the discount comes to an end.
In order to "waive" the delivery costs on your website and offer free delivery to your customers, you need to include the costs of delivering the product in its purchase price.
Packaging the products
If you are responsible for delivery, you will need to factor in the cost of packaging your products when posting them.
2. Indirect expenses
Advertising campaign budget
To increase your traffic, you will need to run advertising campaigns. You can calculate an average for the budget spent on your store, and factor it in your price calculation.
The costs of hosting your website.
You sell your products on a WiziShop store, so you have selected one of our monthly plans. It is a mandatory expense when selling your products online. You may, for example, divide your subscription cost by the number of products for sale, and include it in your sale price. You should also include the transaction fees (according to your offer) applied by WiziShop to your monthly turnover.
The fees relating to your payment method.
Depending on your chosen payment method, fees will apply to the payments you receive, which will also need to be taken into account.
Any social security contributions and taxes for which you are responsible, depending on your status.
If you have a company, you will need to pay social security contributions. Depending on the amount of these contributions, it may be worth taking them into account when calculating your sale price.
Let’s consider a product imported from the supplier AliExpress.
💡 Note: if you are operating a dropshipping store, and you import your products from AliExpress, you will notice that the price displayed on your administration area is not the same as the sale price displayed on the AliExpress product page. Our system runs an algorithm which calculates a recommended selling price for your products.
Here's how it works (our system is based on your product’s basic price, and not the discounted price):
- Purchase price over €100 = the recommended selling price is multiplied by 2
- Purchase price between €50 and €100 = the recommended selling price is multiplied by 2.45
- Purchase price between €15 and €50 = the recommended selling price is multiplied by 2.75
- Purchase price between €3 and €15 = the recommended selling price is multiplied by 3
- Purchase price less than €3 = the recommended selling price is multiplied by 6
(If you import your products from BigBuy, BrandsDistribution, BusyXpro or Webdrop, we use the retail price that the supplier recommends. You can change the price of your imported products after importing them from your product pages.)
Supplier purchase price
To calculate the sale price of our product, we will use its original price. Let's consider a product whose initial price is €0.44.
We can add the delivery charges, which, for an AliExpress Standard Shipping delivery, amount to €3.56.
In our example, you are responsible for deliveries. A post office bubble-wrap envelope can cost between €0.05 and €0.30. Your direct costs will be €0.44 + 3.56 + 0.10 = €4.10.
Advertising campaign budget
You decide to invest €200 per month on advertising for your store. This cost can be divided by the number of products sold on your store. In our example, you have 80 products for sale on your website.
200/80 = €2.50
You will therefore add €2.50 of indirect expenses to each of your products, to cover your advertising budget.
In our example, you have committed to a standard 12-month subscription plan costing €27 excl. tax, or €32.40 incl. tax. This fee is divided equally by the number of products:
32.40/80 = €0.41
You will therefore add €0.41 of indirect expenses to each of your products, to cover the subscription cost.
Social security contributions and taxes
You will also have to factor in your country's social security contributions and taxes
👉 Let’s summarize the costs:
4.10 + 2.5 + 0.41 = 7.01
Let's round it down to 7. If you decide to apply a margin of €10 per sale, your sale price will be:
7 + 10 = €17
Assuming your total social security contributions and taxes amount to 4.2%, for example, add this percentage to your price :
17 x 4.2% = 0.71
17 + 0.71 = 17.71
Let's round it up to €17.99. After calculating your selling price, you will need to analyze the competition to see what the same type of products are being sold for, in order to adjust your price if necessary.
💬 Please do not hesitate to contact your Business Coaches should you have any questions!