High-ticket dropshipping versus low-ticket dropshipping. Which is worth your time?
Is it better to sell a lot of cheap items or a small number of expensive ones? What are the pros and cons of either?
We'll cover these questions and more in this post. So let's get right into it!
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What is High Ticket Dropshipping?
First, if you're new to this business model, we recommend that you bookmark this page and check out our post that details "What is Dropshipping?"
The definition of high-ticket dropshipping is selling products for over $200.
Now, there's really not a price ceiling here. We have sold products for over $5,000. In general though, we're looking at anything above $200.
That means with low-ticket dropshipping, you are selling products at a retail price, for less than $200.
Why Choose High-Ticket Items to Dropship?
The best way I can show this to you is, let's say I was gifting you an actual store, like a retail storefront, and let's just say I gave you an option.
I said, "You can have a Dollar Tree," (which is a store that sells everything for a dollar) "or you can have a Design Within Reach store," (which is a high-end furniture store).
So if you could choose one, which one do you want to make money with?
Well, you would likely choose the one that has an average order value of thousands and thousands of dollars. And that one isn’t the Dollar Tree...
Now, why is that?
Easy. Because it makes more money with less effort.
When people come in and buy something, you get paid. It's a much more profitable business than having a bunch of people come through your store every day, buy 20 items and give you $20, and the next one, and the next one, and the next one.
Now, the Dollar Tree does have a proven business model. But when it comes to eCommerce, you're going to want to leave those ultra low-ticket items to marketplaces like Amazon. Let them sell 12,000 air fresheners a day.
You'd rather have a few customers come in and spend big money, where you actually can earn a real profit.
So this is the idea. This is why we want to focus on high ticket products.
What are the Downsides to Dropshipping High Ticket Products?
You may be thinking that high-ticket dropshipping is just a more expensive business to get into.
You could possibly see yourself selling low-ticket products because, where's the risk?
Whereas high-ticket sales, is a different game...
And that's true, but this is the beauty of it.
If you're going to do this– if you're going to build a dropshipping store and put your time into one of these, why not make it into the one that has greater potential, the one using high-ticket dropshipping?
Remember, the beauty of dropshipping is you're not laying out any money before you actually get sales.
You're not buying this inventory until the customer pays you.
So again, you have this choice and I am giving you this decision.
Which one do you want to build? Why wouldn't you choose the one that has a higher profit potential?
Low vs High Ticket Products
Now, when you think of it a different way, with the pros and cons of high ticket dropshipping versus low ticket dropshipping, we can just compare and contrast two different products.
What Product Would Be Easier to Sell?
On the left we have cell phone cases and on the right we have a stand up paddle board.
Now, let's just say you wanted to dropship low-ticket products, being the cell phone case. The benefits of that would be:
- Easy to ship
- There’s a huge demand
- Plenty of styles and variations
Whereas high ticket dropshipping with a high-ticket product like a stand up paddle board, they have a few downsides:
- They’re large
- Heavy to ship
- There’s a smaller market
With a smaller market, a lot less people want to buy a paddle board than the amount of people that want to buy a cell phone case.
Because of that, most people gravitate towards the low-ticket products when they're getting into eCommerce and dropshipping.
They're concerned with getting a great volume of sales. So, they usually end up choosing something like cell phone cases or wax cloths to dropship.
They're focusing on the wrong thing.
What are the Benefits of High Ticket Dropshipping?
High ticket dropshipping actually gives you the ability and ease to sell less and earn more.
It comes down to a very simple equation that I call units sold versus profit.
This is very important. When I first realized this equation, it totally changed my business.
I personally got started by selling cookies online. Each order had an average value of $15. Once I learned this, I totally shifted my business.
Take a look at the graph above.
On the left we have the two products. We have cell phone cases and stand up paddle boards. Then we have sale price, we'll just use round numbers here to make math easy.
For cell phone cases, the average retail sale price is $10. With stand up paddle boards, average prices is closer to $1,000.
Now, if you do this right, if you build a dropshipping store using my Drop Ship Lifestyle system, you can get a profit margin typically between 25 and 30%.
Since we’re using round numbers for simplicity, we’ll say net profit of 30% in this scenario.
That means every time you sell a cell phone case you would keep $3 as net profit. And every time you sell a stand up paddle board you would keep $300 as net profit. However, making those sales both required the same amount of work.
Once you can leverage this and you can make your whole business about high-ticket dropshipping and high-ticket products, you will be well on your way to being successful with this whole business model.
Less Sales, Same Amount of Work, but More Money with High-Ticket Sales
Let's just do an example here, and we'll use these same two products above: cell phone cases and paddle boards.
Let's say you're brand new to dropshipping and you goal is to have a target monthly net profit of an extra $3,000 in your bank account.
If you make $3 on each sale of a cell phone case, and $300 on each sale of a paddle board, think about how many units and sales you need each month to reach that target.
With cell phone cases, you would need to sell 1,000 every single month! Whereas paddle boards, you would only need to sell 10 units. That's like one sale every three days.
If you've ever been in sales or customer service before, you know that 1,000 customers a month is enough to make you pull your hair out. It's enough to have a headache. It's enough to need a full team to support.
On the other hand, 10 sales a month, a sale every few days, you can easily handle that on your own.
Again, you'll be making the same amount of money as the person doing low-ticket dropshipping that's pulling their hair out, thinking, why did I even get into this business?
Go with high-ticket dropshipping. You will make more money per sale.
Here’s a Real Life Example from our Community of High-Ticket Sales
Here is a screenshot from one of our members-only Facebook groups. This is for my eCommerce coaching program, Drop Ship Lifestyle, by the way. Iria posted this, and they got one sale for $5,720.
Now, if you take that 30% profit margin and you take the amount of money this order came in for, $5,720, you times it by 30%, you get a net profit of $1,716 from one sale.
So while Iria was doing this, there were people out there selling cell phone cases. They were doing the same amount of work, but earning $3.
Who would you rather be? It's pretty obvious that high-ticket dropshipping is better than low-ticket.
Here are a few reasons why the best products for dropshipping are high-ticket products:
- You’ll have fewer orders, but make more money.
- Less customers is a good thing, because there’s less customer service.
- You’ll have fewer orders to process, which means it takes less time to run your business.
- Most of all, it’s easier to buy paid traffic!
Now, if you follow Drop Ship Lifestyle, you know that I'm a huge fan of paid traffic. When you're not making much money per sale, it's almost impossible to do this profitably.
Let's look at this example where we have our cell phone case and our paddle board again. We're looking at how many units we would need to sell. 1,000 cell phone cases or 10 stand up paddle boards:
Again, this is to reach our target monthly profit.
Our conversion rate with a Drop Ship Lifestyle store is typically about 2.5%. That means with cell phone cases we would need 40,000 people to visit our website every month to get $1,000 sales. 40,000!!
Whereas with stand up paddle boards, we would only need 400 targeted visitors!
If you have to spend money on 40,000 visits for your cell phone cases… well, you know how expensive that can be.
You know it's going to be next to impossible to have a profit at the end of the day. But 400 targeted visits, anybody can get that to their website. It is not that hard if you have a system to follow. For more tips and tricks on getting sales, check out our Ultimate Dropshipping Guide.
How to Transition From Low Ticket to High Ticket Dropshipping
You may be reading this right now and thinking, “Hey, listen, Anton. I'm doing low-ticket dropshipping. I hear what you're saying because my store's not profitable. I can't get Facebook Ads to be profitable. Customers aren't happy because shipping's taking too long. What can I do?”
Well, the good news is, if you already have a Shopify store set up, you can transition from low-ticket to high-ticket.
My advice is, if there is a higher-priced product range with what you sell, move up the ladder. Focus on the more expensive products and phase out the low-ticket ones.
Now, maybe you can't do this. Maybe what you're selling does not have a high-ticket price product line.
If that's the case, then my advice is just go ahead and build a brand new Shopify store using your knowledge for how you built the first one. This time though, focus on a high-ticket niche, and focus on going with where the real money is and where the real opportunity is.
Recapping Why High Ticket Dropshipping is the Way to Go
Hopefully you can now understand why high-ticket dropshipping is the way to go. If you need a reminder– or just scrolled to the end for a quick recap, here it is:
- High-ticket products are items that cost more than $200.
- It takes virtually the same amount of time and work to sell a $3 phone case that it takes to sell a $300 paddle board.
- You want to sell high-ticket products because you’ll spend less time making sales, but make much more money.
- It is possible to transition to high-ticket dropshipping, but you might have to build a new Shopify store using your knowledge from building the first one.
Now, if you want to know more about the best products for dropshipping and how to find the high-ticket products that fit my proven niche criteria, watch this episode from our Drop Ship Weekly YouTube channel.
As always, any questions, let me know, and if you got value from this video, please do give leave me a comment letting me know below.