How to Price Dropshipping Fashion in Singapore: A Margin-First Method

Start From the Margin You Need

Set a target contribution margin before choosing the retail price. Contribution margin is the share of realized revenue left after variable costs for the order, including product cost, shipping-related costs, payment charges and advertising where applicable. If the target is 20%, a S$25 selling price must leave S$5 in contribution. The cost ceiling is therefore S$20; if estimated variable costs are S$15, the price needs to be S$18.75 to produce S$3.75, or 20%. Use the product pricing calculator to test the arithmetic.

These measures answer different questions. Markup is profit divided by cost: useful when checking how much you add to a supplier cost. Gross margin is gross profit divided by revenue: useful for evaluating product economics before operating costs. Contribution margin is contribution divided by revenue: the measure to act on when deciding whether a sale can support acquisition and other variable costs. ORVX computes gross profit and margins and reports contribution after advertising by product and collection, so the target can be checked against realized performance rather than a headline price.

Build the Full Cost Before Setting Price

Build a landed-cost model in SGD for every delivered order before choosing a retail price. Include the supplier product cost, inbound freight, packaging, delivery to the customer, payment processing, platform charges, refund and return handling, discounts, and any other cost that changes with the order. Treat discounts and refunds as reductions to realized revenue, not as missing costs. Calculate percentage fees on the amount actually collected after discounts, and keep return-related costs separate from the refunded sales value.

Show the Price in Singapore

Work backwards from the revenue your margin requires. If variable cost per delivered order is C and your target contribution margin is M, required pre-GST revenue is C ÷ (1 − M). For a GST-inclusive customer price, displayed price = required pre-GST revenue × 1.09, because the Inland Revenue Authority of Singapore (IRAS) states that the current GST rate is 9%. GST is then the tax portion of that displayed amount, not contribution revenue. For a tax-exclusive price, display the required pre-GST revenue and add GST at checkout instead. Choose one treatment consistently across product pages, ads and checkout; for fashion shoppers, a GST-inclusive display makes the amount payable immediately clear.

Whether you charge GST depends on your position and the transaction. IRAS says a Singapore business must register when taxable turnover exceeds $1 million for a calendar year, or is expected to exceed $1 million in the next 12 months. IRAS also defines low-value goods as goods with a sales value of S$400 or below imported by air or post; a GST-registered overseas supplier charges GST at purchase. Apply that rule only where the order qualifies, do not add a blanket duty or tax assumption to every product. Test the calculation in ORVX’s product pricing calculator, keeping the displayed price separate from GST and from your margin calculation.

Read the Worked Example Correctly

Read the worked example from left to right. The inputs are the target contribution margin and each variable-cost line: for example, a 60% target and SGD20 total cost per delivered order. The allowable cost is the part of revenue the costs may consume: SGD50 × (1 − 60%) = SGD20. Product cost of SGD8, freight of SGD3, packaging of SGD1, payment fees of SGD1.50, expected returns of SGD2 and advertising of SGD4.50 add to that SGD20. These are deductions from realized revenue, not extra amounts to add to the margin.

The required pre-GST selling price is therefore SGD20 ÷ (1 − 60%) = SGD50. That SGD50 is the customer-facing price when your store price is shown before GST. If your business charges GST, the Inland Revenue Authority of Singapore states that the current GST rate is 9%, making the displayed amount SGD54.50 (SGD50 × 1.09), subject to your GST treatment. Use the product pricing calculator to change any input and see which cost or margin assumption moves the final SGD price.

When a Higher Price Is the Wrong Move

A higher displayed price is not automatically more profitable. Compare the contribution left after the discount, payment fee, GST, landed cost and expected return or refund cost.

A Pricing Review Routine

Run the review on a fixed schedule, such as weekly for a rolling 30-day window. Use delivered orders only. For each product, record the actual supplier and fulfilment costs, realised selling price after discounts, refund value, and contribution margin. Separate products with enough completed orders from products with too little evidence to justify a price change.

Contribution margin is the action measure. If it is consistently below your target after actual costs and realised discounts are included, investigate the cause and change the price only when the economics, not a temporary data error or fulfilment issue, requires it. A price change should be tested at the product or collection level, not applied across the whole store by default. ORVX can report where a price experiment is worth running, but it cannot estimate price elasticity or predict how demand will respond.

The other measures diagnose why margin moved. A lower realised price points to discounting or markdowns. Higher actual order costs indicate a supplier, shipping or packaging problem. Refund value and return rate show whether the delivered-order economics are being eroded after purchase. Review those causes before raising the displayed price. A product can have a low realised price and still earn its target margin; another can sell at full price and miss it because fulfilment or refunds are expensive. Use the product pricing calculator to check the arithmetic, then keep the review tied to actual store data.

• Change price: contribution margin is persistently below target after verified costs and realised discounts.
• Diagnose first: realised selling price, refund value, return rate and actual order costs explain the margin gap but do not independently justify a price change.

A Singapore fashion price is workable when the displayed SGD amount covers the complete order economics and reaches the margin required by the business. Review the calculation whenever costs, tax treatment, fulfilment, or discounting changes, rather than raising price automatically.