The Final Price calculation for the drop shipping arbitrage practitioners can be calculated in multiple ways. In general all of the methods are using 4 parameters:

Final Price - The selling price at the target website (e.g. eBay)

Source Price - The buying price (cost price) at the source website (e.g. Amazon)

Break Even - All the sale related fees (e.g. eBay selling fee, Paypal fee and Amazon taxation on top of the price)

Desired Profit - In different formulas will be counted differently, in DSM it is a % of the source price

The traditional methodology takes the source price, adds the break even percentage calculated from source price and adds the desired profit, again, calculated from the source price.

At DSM we believe that safety is first, therefore we are using a simple mathematical trick to make sure that the break even calculation will be taken from the target price and not from the source price

Let's show an example of a final price calculation to an item with a $10 source price, 20% break even and 20% desired profit

We hope you find this information useful, please contact us for any further question

Did this answer your question?