There are commonly two types of pickups used on acoustic mountain dulcimers; a soundboard pickup and a bridge pickup.
A soundboard pickup is a piezoelectric sensor that adheres to the soundboard of the dulcimer. This type of pickup translates the vibrations of the wood into a signal that can be run through an amplifier. These pickups are either temporarily mounted to the outside of the dulcimer or permanently installed inside the dulcimer. These pickups will transmit any sound that resonates through the dulcimer including finger-noise, pick noise, or a shirt button brushing against the instrument. For some styles of playing they work well, for others they can pick up a lot of extraneous noise.
The simplest and least expensive option is a removable, external soundboard pickup. These are applied with a putty or double-stick tape that comes with the pickup and requires no modification to your dulcimer. One does need to be careful when removing the pickup to avoid damaging the finish.
If you like the sound of a soundboard pickup you can also have one permanently installed in your dulcimer and wired to an end pin jack. An end pin jack is a strap button that also receives the cord going from the pickup to the amplifier.
A bridge pickup is piezoelectric sensor that replaces the bridge of the dulcimer; the bridge itself becomes the pickup. A bridge pickup transmits the vibrations of the strings and avoids the extraneous noises that may occur when using soundboard pickups. In my opinion bridge pickups are a better choice if you plan on running your dulcimer through effects pedals.
A bridge pickup must be installed on the dulcimer. Depending on the construction of your dulcimer this procedure may require having a slot cut in your fretboard to receive the bridge pickup. If your dulcimer already has a bridge mounted in a slot the slot may or may not be of the right dimensions so again some modification may be necessary. The bridge pickup will also be wired to an end pin jack.
With either type of piezoelectric pickup the sound can be enhanced by using a preamp. The preamp allows for control of tone and volume and can help give the pickup a more natural sound.
Pickups make it easy to get a lot of volume but I prefer the natural sound achieved by using a microphone. A microphone “listens” to the air set in vibration by the dulcimer in a similar manner to an ear.
When performing solo I simply use a microphone on a stand. When performing in small ensembles I have used a small microphone mounted on the dulcimer near a sound hole and have been happy with the results.
There are many opinions about which pickups, microphones, preamps and combinations of pickups, microphones and preamps work best. What is important is to find what works best for you.