In Drop Ship Lifestyle, I always recommend high-ticket dropshipping instead of low-ticket. Low-ticket dropshipping focuses on selling cheap items—it’s not worth your time. For an entrepreneur, it poses many challenges.
I’ll expound on that in this blog post. Learn all the reasons you should avoid this and go for high-ticket dropshipping instead. Let’s start!
1. It Has a Low-Profit Margin
To be profitable in dropshipping, aim for an average profit margin of 30%.
In DSL, we consider products that cost less than $200 low-ticket. Because of their low prices, there’s little that will go to you in every purchase. For example, if you sell $30 products, you only get a $9 profit, which isn’t ideal.
However, with high-ticket products, you can earn a $60 profit for every $200 sale. Thus, the higher the cost of your products, the higher the sales and profit you can generate.
2. It Requires More Sales to Stay Afloat
Because of their low profit margin, you need hundreds or even thousands of sales to achieve substantial profits. You will need to work harder on selling your products. With high-ticket products, you only need a few to be profitable.
Do you want to know how many sales you need to make to reach a specific profit goal? Just divide that goal amount by the potential profit per sale. That’s the number of sales you need to keep your business afloat.
Remember, you need that profit to scale your business. If you need hundreds of sales just to generate enough profit, scaling will be challenging.
3. More Customers Means More Customer Support
Requiring more sales means needing more customers. If you have many customers, there’s also a need for more customer support.
For example, if you need 1,000 monthly sales just to achieve your target profit, that means you will likely have to deal with almost 1,000 customers. If you have experience in customer service, dealing with that many customers can be overwhelming.
Moreover, low-ticket products are usually marketed to lower-income consumers. The issue is that these people often stretch their means to buy these items, so there’s a high chance of handling more customer service and more returns.
With a not-so-great profit, this is a headache. Plus, even if you want to outsource customer service, the initial revenue you make may not make it feasible.
4. More Orders Means More Time Required
Getting more orders is good, but it also means working overtime to process everything. With the profit you’ll be getting with low-ticket products, it’s totally not worth it. This can negatively impact your work-life balance.
It can eventually reach the point where you might need to hire more people to handle everything. Again, this might not be ideal for the revenue you’ll make with low-ticket products.
On the other hand, you need less time with high-ticket customers. This is because you don’t need a lot of orders to make a good profit. You can even use that extra time to improve your business.
5. Less Profit With the Same Amount of Work
Starting a low-ticket and a high-ticket dropshipping business requires the same amount of work. You will still perform market research, reach out to suppliers, build a store, and market and promote. But the results aren’t quite the same. Even with the same number of sales, you get less profit with low-ticket products than with high-ticket products.
For example, let’s say you market for a week and make ten sales with a $20 product. Your profit will only be $60. But selling ten $500 products for a week gives you a $1,500 profit.
6. It’s Not Recession-Proof
Most low-ticket products are affected by economic changes, like inflation rates and consumer spending. Inflation affects the prices of items while consumer spending affects how much people will spend on products. If the retail prices of low-ticket products increase, customers may be less likely to buy them.
To maintain stable profits, choose recession-proof products. Most high-ticket items will perform well even during a recession.
Here are some niches you should consider:
If you want to find other recession-proof niches, here are some tips for you:
7. It Works Better for Marketplaces
You might be thinking about how Dollar Tree is successful despite selling low-ticket products—it has a different business model. In e-commerce, it's better to let marketplaces like Amazon sell those cheap items. After all, it’s a big company with many resources and people. They can handle thousands of orders and customers.
As a dropshipper, whether you’re by yourself or you have a small team, that will be hard. It’s better to have a few customers that buy expensive items to earn real profit. This is why it’s better to focus on high-ticket products.
Start Your High-Ticket Dropshipping Journey
When it comes to dropshipping, selling low-ticket items will make you feel stuck—it’s a dead-end. Instead of using all your time, effort, and money to start a low-ticket store, build a high-ticket business. With the right niche and products, you can easily have a profitable store.
Join my webinar to learn more about high-ticket dropshipping!
Plus, if you have any questions, let me know in the comments.
