Low-Ticket Vs. High-Ticket Dropshipping: Which Is Best For You?

When you’re first getting into e-commerce, making money online, entrepreneurship, and trying to escape the rat race, it’s extremely difficult to know where you should be spending your time or even what business model you should be working on.

You’re here because you want to know the difference between low-ticket vs high-ticket dropshipping – which is better?

I remember when I first started getting into e-commerce, there was a huge divide between high-ticket and low-ticket.

“Low-ticket is a waste of time!”

“High-ticket is so much harder!’

Etc, etc, etc. It was hard to know where to even begin and who was telling the truth.

I always felt like the low-ticket guys were bashing high-ticket sales, and the high-ticket guys were saying that low-ticket is a waste of time.

So these are my honest thoughts, from someone who has built successful low-ticket and high-ticket e-commerce businesses.

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DEFINING LOW-TICKET VS HIGH-TICKET DROPSHIPPING

First, we need to know what we’re even talking about when we talk about low-ticket vs high-ticket dropshipping.

Dropshipping is an order fulfillment method where you take an order from a customer, then purchase the item from a supplier who then ships the item directly to your original customer. You never touch it.

When people refer to “dropshipping”, normally they are referring to low-ticket dropshipping where they run ads on social media platforms to try and drive impulse purchases on their store. The item is then shipped from a supplier in China directly to the customer.

When they refer to high-ticket dropshipping, normally they are talking about functioning as a retailer, carrying multiple brands/products on their store, and shipping from multiple US-based suppliers.

These are loose definitions, but I think they function as a decent starting point.

THEY BOTH WORK

The most important thing to keep in mind is that dropshipping is just an order fulfillment method.

Low-ticket dropshipping and high-ticket dropshipping are just order fulfillment methods for different business strategies.

Both methods work, they’re just different. Next, we’ll take a look at the pros and cons of each.

PROS OF LOW-TICKET DROPSHIPPING

Low-ticket dropshipping is great in a lot of ways.

First of all, you can sell nearly anything and it’s quick. If it’s available on AliExpress, you can probably get it up on your Shopify page within a matter of minutes.

You can get Facebook ads created by a video editor, and be good to run ads within a few days. If you find a winning product, you can scale as quickly as you can since you’re converting cold traffic. You then ride it out as long as the product is profitable.

It’s also incredibly low-cost. Starting a store on Shopify is incredibly affordable, and you don’t have any overhead. Your biggest expense is going to be your advertising budget until you start making sales.

Remember, you only pay for a sale once you have made it, which is awesome for cash flow.

Speaking of which, the business relies on making a lot of sales, which means for any one sale, you have minimal risk. With my first winning product, the customer paid about $40 and my cost was around $18.

At its peak, I was doing about 50 orders a day, which meant if I had to eat a refund or replace an item that was lost in shipping, I could do so.

You also have really interesting ways to pivot. Once you find a winning product you can move on to getting private labeling done, holding inventory, bundling products, influencer marketing, and building out additional marketing sources like organic social media.

Some people use a dropshipping store to test new products, then when they find a solid winner, spin that off into a one-product store with branded logos, inventory, etc.

Gym Shark is an example of a company that started out doing low-ticket dropshipping. Eventually, they started creating their own inventory. The company is now worth 1 billion dollars.

CONS OF LOW-TICKET DROPSHIPPING

Like any business, it’s not all puppies and rainbows. Low-ticket dropshipping has some negative aspects that need to be considered.

You are creating demand. This is the biggest value-add of a dropshipper, and it’s why someone would purchase from you instead of going onto Amazon and purchasing the same product for 25% cheaper.

Creating demand is really, really hard. You need to learn how to make someone see your ad on their social media network, think “this is amazing take my money!” and purchase on the spot.

Of course, it is possible. To become a successful low-ticket dropshipper, you need to learn how to become a successful marketer.

There is also the hit rate. Winning products happen when you connect a great offer to the right audience – not every product you launch is going to make a profit.

In my experience, once you know how to successfully do this, 1 in 5 products, on average, will become winners. The good news is, that one winning product can make you tens of thousands of dollars. The hard part is sticking with it until it happens.

Eventually, winning products die out – so new products need to always be launched if you’re sticking with traditional low-ticket dropshipping. It’s a “boom and bust” kind of business.

There are other cons to the business model. There are lots of copycats out there. You have to deal with ad account bans. Shipping usually takes a couple of weeks at least, but this can be shortened with a quality registered agent.

It’s all about taking the good with the bad. You can scale quickly and be profitable and there aren’t a ton of barriers to entry. That’s great for when you’re getting started, but once you have success, you’ll find that there aren’t a ton of barriers to entry. It’s a double-edged sword.

PROS OF HIGH-TICKET DROPSHIPPING

I love high-ticket dropshipping for a variety of reasons. But the big one is because it minimizes risk.

You carry dozens, if not hundreds of products from various suppliers, which means that your risk on any one product or even supplier is minimized.

What you are looking for is to have several brands/products that regularly sell. Some might make you $500 a month, some might make you $1000, and some might make you $5,000+.

If one supplier becomes difficult to work with, or one product gets discontinued, there are always other ones you can leverage.

Plus, the best suppliers don’t let everyone sell their products, so you have some barriers to entry. While this can be intimidating in the beginning, once you are in with them, it helps minimize the likelihood of a brand becoming saturated.

From a marketing perspective, you are also capturing bottom-of-the-funnel traffic – meaning they are generally ready to purchase.

That makes it easier to convert sales than completely cold people. Once you find some products that sell using paid traffic, you can test out different traffic sources like SEO.

Another positive element is the shipping times. Because these are US-based suppliers, you should be able to quickly get items sent to your customers all over the US.

The current state of the world has changed this – logistics, supply chains, manufacturing. All of these have slowed down and shipping is taking longer than usual. It will bounce back though!

There is also MAP, which stands for the minimum advertised price. MAP sets a rule with all retailers to not sell below a certain number – and all good niches have MAP. This protects people from undercutting one another and protects your profit margin.

Additionally, I think high-ticket dropshipping is more scaleable and stable in the long run. Think about it – because you have sales coming in from multiple brands and multiple traffic sources at a consistent price, it’s easier to scale to those tremendous numbers like $200k or $300k+ a month.

CONS OF HIGH-TICKET DROPSHIPPING

On average, I think high-ticket dropshipping can be more of a stable business, but this doesn’t mean it’s stable on a day-to-day basis. You might have a day where you have no sales, another day where you’re down -$2k on a refund and a third day where you do $8k in sales.

Risk is concentrated into fewer orders, which can be challenging to deal with at times. You also have to deal with returns, warranties, and chargebacks in a way that is significantly more challenging than with low-ticket.

Sometimes I get orders for $20k or more. You might be thinking, “Wow! What is that profit-wise? $2k? $4k?”, and the truth is they can be very profitable.

But I also get nervous about an issue with an order that big can cost a lot of money.

Another thing to keep in mind is that each brand/product has limited demand, and there is only so much of it you can capture profitably. “XYZ Training Bike” only gets so many searches per month, but it’s balanced out by having multiple brands and multiple products along with different traffic sources.

You don’t need to capture all the demand for a single product, but this does make it more challenging to scale at times.

TRY MIXING BOTH

One really interesting path that I rarely hear anyone talk about is mixing both strategies.

For example, let’s say you have a high-ticket dropshipping store in the fitness niche. It’s humming along nicely, and you’re bringing in sales every month.

You could then try to experiment with selling fitness bands as an up-sell on the checkout page, or the backend in your email system.

Let’s do some quick math here: Let’s assume the normal price of $2.08 for the bands + $3.14 for shipping costs + $1 in transaction fees (a rough estimate). This puts us at $6.22 all-in for your costs.

After doing some quick Google Reverse Imaging, I found a store selling this exact product.

Here, they’re listing the product for $19.95. They currently aren’t charging shipping, but I bet you could easily charge $3.95 for shipping. This puts your total revenue at $23.90.

Doing some quick math, every time you sell one of these, assuming you sell one at a time and don’t use bulk discount up-selling (which you should do), you will make:

$23.90 Revenue – $6.22 Cost of Goods Sold = $17.68 Net Profit.

$17.68 may not sound like a lot of profit, but remember, this is traffic that you already have and you have already paid to acquire, whether via ads directly or SEO. And it can add up quickly.

LOW-TICKET UPSELL EXAMPLES

Let’s say you have 100 people interacting with your store a day, and you can convert 1% to your fitness band up-sell.

100 Users x .01  Conversion Rate = 1 Sale, Netting $17.68 Per Sale x 30 Days = An extra $530.4 a month in pure profit.

I don’t know about you, but an extra $520 a month for leveraging the traffic I already have sounds good to me.

Here are how the numbers shake out if you’re driving even more traffic:

300 Users x .01 Conversion Rate = 3 Sales Per Day, $53.04 Per Day x 30 Days = $1,591 Net Profit Per Month

600 Users x .01 Conversion Rate = 6 Sales Per Day, $106.08 Per Day x 30 Days = $3,182 Net Profit Per Month

1000 Users x .01 Conversion Rate = 10 Sales Per Day, $176.80 Per Day x 30 Days = $5,304 Net Profit Per Month

As you can see, the net profit adds up quickly.

The best part is, that you can automate this on the backend and you can get a private agent to fulfill the orders cheaper and quicker than Aliexpress. I bet you could get your COGS down below $5 per each item.

Anyways, as you can see, this is one example of leveraging a mix of low-ticket and high-ticket dropshipping to get some pretty awesome returns.

WHAT AM I PERSONALLY DOING IN 2022 AND BEYOND?

Low-ticket dropshipping changed my life. It was my first experience with paid traffic and e-commerce.

It was the first time I made real money online. Life-changing money.

But eventually, I got tired of the “boom and bust” model. I wanted to work on things that, once set up, would pay me indefinitely.

I wanted more stability and less risk.

And that’s when I started high-ticket dropshipping.

I like leveraging demand for other people’s products. Because each supplier usually has anywhere from five to fifty products, I like having the risk spread across multiple suppliers and multiple products.

I also find it easier to utilize additional traffic sources with high-ticket dropshipping. Paid traffic, SEO, affiliates, email marketing, etc.

I’m sure some people have figured out how to do this with low-ticket dropshipping, but I think it’s easier with high-ticket in my opinion.

Last year, my high-ticket dropshipping store did $1.2 million in sales. That is $100k a month on average. Some months were closer to $75k, some months we did $135k.

My goal is to ride out the logistic issues currently affecting the world, do similar numbers into the back half of 2022, and then scale into 2023 and beyond.

SUMMARY OF LOW-TICKET VS HIGH-TICKET DROPSHIPPING

Low-ticket dropshipping is less complex and faster to get started with.

It’s harder to make sales, but it’s easier to scale once you find a winning product. You’re looking to create demand and make as much profit as you can, as quickly as you can.

High-ticket dropshipping is more complex and slower to get sales.

It’s easier to make sales, but it’s harder to scale because demand for each product/brand is finite. You’re looking to capture demand and scale more steadily and predictably.

THIS IS NOT A GET-RICH-QUICK SCHEME

Dropshipping is not a get-rich-quick-scheme. This is a real business.

Starting a business is hard and it takes time – you have to build skills like learning how to market, self-discipline, and more.

The beautiful thing in my opinion is that those skills are transferable to all facets of business, and really, all facets of life.

Anyways, please don’t start an e-commerce business if you’re thinking that money will come raining down from the heavens tomorrow.

But if you treat this like a real business, learn the necessary skills, and take action, dropshipping can change your life.

It certainly changed mine.

IT ALL COMES DOWN TO YOU

Both business models work and work extremely well. Thousands and thousands of people have changed their life with e-commerce.

I think the real question is, which business model sounds more interesting to you?

Because the truth is, the best business model is the one you stick with.

I have had the pleasure of meeting a lot of successful entrepreneurs in my life, and the ones who have succeeded are the ones who stick with it. All businesses have their challenges and require hard work.

I don’t think you can go wrong with low-ticket or high-ticket dropshipping start with whatever sounds more interesting to you.