Shopify upsell promotions improve your bottom line. When you upsell, you reduce costs, thereby improving your margins.
Consider this situation:
Product A retails for $10. The wholesale price (and other associated costs) means that the product costs you $5. That’s a 100% product margin. However, you offer free shipping. Free shipping adds 50 cents to your cost. That’s $5.50. Your margin is now $4.50 per item or 90%.
Now, let’s suppose you sell two items at $15. Your cost is $10 total. That’s a 50% margin on the total sale. Shipping still costs you 50 cents. Your cost is now $10.50. That means you make $4.50 on both items. That works out to a 45% margin.
Doesn’t seem too enticing, right?
Well, suppose you make ten sales at regular retail price. That’s a $45 profit.
Now, suppose you make twenty sales at the upsell price. That’s a $90 profit.
How is this possible?
It all boils down to upselling and sales psychology. Customers perceive they are getting a better deal. So, you make more sales. While the margin is higher than the regular retail price, you increase your profitability by selling more despite the lower margin.
Shopify upsell deals provide customers with one key advantage. They get more value for their money. Sure, you can make more money by selling more items at regular prices. However, your customers won’t perceive added value. However, a great Shopify upsell deal gives them a better deal for their money. Ultimately, it’s a win-win. The customer gets a better deal, and you make more sales.