how does shopify calculate conversion rate

let's talk about conversion rate,shakespeare in the flesh,what is going on guys it's your boy luke,all here about another fire,about your pet e-commerce video did i,mention,i've sexy there before where you are,right now you know scrolling through,youtube,how to increase your conversion rate and,you're seeing all these tips that might,be,slightly helpful trust badge or high,converting landing page whatever that,means,writing out a full length product,description proper product photos but no,one is giving you the real tips as you,know i like to take the hood off so,before i go any further i want to pop in,and show you that i know,what i'm talking about one of our brands,27 000,in the first two weeks of december as,you can see our conversion rate is a 9.6,damn near 10 look at it beautiful you've,been drop shipping for a while you know,the add to cart rate it's pretty,standard at about 11 or 12,but the fact that we're converting,mostly as customers says something about,what we've been able to do with our,product and our landing page if you've,clicked on this video it's most likely,because you can't get your conversion,rate to where you want it to be,or where it needs to be for your funnel,to be profitable,but trust me it's really not as hard as,people are making it out to be this is,the same process that we use to up our,conversion rates without sacrificing,profits,first thing i want to highlight is let's,bring up that same date range on,facebook ads we spent ten thousand,dollars,to make back that twenty seven thousand,that's almost a three row as it's pretty,darn good,if you like learn about facebook ads,ecommerce and drop shipping launch you,just drop a like and subscribe because,i'm back here every monday talking my,face off one thing that i want to point,out is,our click-through rates for that time,period weren't anything spectacular our,cost per clicks were all,above a dollar our click-through rates,were averaging around two percent which,isn't anything outstanding either,normally when you see a cost per click,like that and you're selling a product,at eighteen dollars you're not going to,be able to turn a margin,but how we're turning three roads with,the price eighteen dollars with,only a dollar cost per click is because,our conversion rate is almost ten,percent,what it comes down to is a fair product,price for this to work for you you need,to,reinvent the way you think about pricing,your product i'm going to take you,through how we do it what you've been,taught to do in a normal circumstance is,go on aliexpress find this product let's,say this is perfect you find this,charging cable for three bucks you see,there's three dollar,and forty cent shipping so that's a,total of six dollars and forty cents,go in here to your calculator you might,multiply it by two point five or even,three and you'll see oh i should sell,this at,15 to 20 dollars i know that's how you,think about it because that's how my,mind used to work before we discovered,this new method of doing so,all of my students who come to me are,always asking this question too,hey luke what do you usually price your,product is like two to,two and a half or three times higher,can't think about it like that,alternatively what you have to do for,this winning product in particular this,fast usb,charging cable this is very similar what,you want to do is you want to look,up your product in the western world,amazon google and see what your,competitors are selling this app not,just your drop shipping competitors who,you don't absolutely know how much,revenue they're doing but your amazon,competitors these people,have 3 000 ratings on their listing and,it's ranked 270 in usb cables usb cables,is a massive category on amazon,it's safe to assume that they're pushing,at least five thousand dollars per day,in sales,anyways what i'm trying to say is,they've determined the market price of,this product people,aren't gonna go on your website and pay,sixteen to twenty dollars if they can go,and get it on amazon a year ago and drop,shipping that didn't necessarily hold,true but,now people are price checking more than,ever consumers are very intelligent they,know,what a normal price to pay for a product,is so instead of offering it for a,higher price,on your website you need to offer a very,fair price on your website you need to,come at amazon's price,or even lower the product cost in china,is so expensive how am i going to turn a,margin fuel you i really do shipping,prices and product prices in general on,aliexpress the traditional method of,drop shipping have increased,substantially over 2020 due to coven all,the shipping constraints that we're,seeing with these airlines out of china,it's unfortunate but we have to be,dynamic and not be scared to change our,business model alternatively what i,recommend that you do is go on,alibaba.com which is wholesale look up,that same exact product,see this product right here boom we can,even order 20 pieces or,a hundred pieces a dollar sixty this is,how amazon is able to sell it at,thirteen dollars because they're,sourcing it for a dollar sixty they're,getting it in the u.s,and if you didn't know i have,fulfillment centers shipped in three to,five days from the usa,anywhere in the us or a dollar fifty,plus at a dollar fulfillment fee,so your cost of goods sold effectively,250 for fulfillment and shipping,plus a dollar sixty which is four,dollars if your product cost including,shipping is around four dollars and you,can get away with selling this product,for twelve to thirteen dollars,just like they're doing on amazon if you,order in bulk and you buy five thousand,you can get that product cost down even,more so what you've done effectively is,you've brought your cost of goods sold,down from 650,having to 2.5 or 3x that product on your,site is 16 to 20 dollars down to four,dollars flat and you can now price it on,your site 12 to 13,which is what amazon is pricing it at,this is absolutely the only way you're,ever going to bring your conversion rate,close to 10,like this store for our store we're,actually pricing our product lower than,what it is on amazon i'm not going to,show you the product today because then,you could run off and steal my product,i'm not trying to have that happen i,think you understand what i'm saying you,need to rework your mind to think about,it like that rather than finding it on,aliexpress and thinking,oh how do i 2.5 or 3 exit on my store,no you need to think about it from a,consumer size successful companies in,today's day and age,are all consumer focused think about,airbnb disrupting the hotel industry,they are more consumer focused think,about uber,taxis were charging ridiculous prices,they came along they made it more fair,for the consumer that's why they're,succeeding same thing here you can't,find your,product in china and just decide a,markup price how you turn a margin,is by running successful advertisements,drawing them into a product that might,already be well known,bring them to your website theoretically,they should want to buy that product if,it's a solid price if you guys don't,have a drop shipping store make sure you,think about this when you're going to,start your new store and if you do,go in and test lowering your price if,you're getting like a one to two percent,conversion rate and your products twenty,four dollars try lowering to 19.,that price difference can make a massive,change i've even seen,massive changes happen lowering a,product price from twenty four dollars,to twenty two dollars even that two,dollar price range,could potentially double your conversion,rate if you're doubling your conversion,rate at a two dollar cheaper cost for,the customer you're going to make more,money,no you don't need to be a rocket,scientist to realize that,i know this was a super quick video when,i want to thank you guys for watching,today this is what we're doing,in 2021 to increase our conversion rates,it's a strategy that no one talks about,sure you can try all these fancy things,to your product page and that might help,but really what it comes down to is,giving the consumers a great experience,a great price,be consumer focused don't be greedy and,don't overcharge your conversion rates,well thank you you guys like this video,please,comment and ask more questions i would,love to elaborate on this topic and,drop a like drop a subscribe because i'm,back here every monday with a fresh,sexy fire hot new commercial video and,until next week,best of luck drought shipping peace out

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