5 Tips to Help You Find the Right Price for Your Wares
It’s one of the more hair-pullingly frustrating questions for every new ecommerce business – just how much do you charge for the products you sell? At times it seems like you’re giving stuff away for free and others like you’re charging an arm and a leg. In either case neither you nor the customer is entirely happy unless you find a better price.
But how do you find this magical number? Here are a few tips to get you started on the right path to find the best price possible for all your wares.
First and foremost you have to figure out how much shipping an average package and completing the transaction will cost you. Naturally, if you’re not getting back at least enough money to cover your costs then you’re quickly going to go out of business.
Make sure you’re not just thinking about obvious costs, though. For example, shipping costs and material to make an item are costs you can see right away. But how much does it cost you to run your home office, or pay income taxes, or buy your employees’ health insurance?
2. Price Elasticity
Just how much can you feasibly get away with charging before customers start dropping away? This all depends on price elasticity. For example, if you sell an item that has a pretty strong substitute (smartphones, household items, food, etc.) raising your price too much will make everyone but your biggest fans jump ship. You’ll probably have to perform some strict testing to find that pricing sweet spot.
Of course price elasticity means nothing if you have a truly unique and amazing item everyone must have! The more original your idea the better off you are with pricing…as long as the item stands the test of time, however.
This is why it’s so important to check out the market before selling your first item. Is there really nothing out there like your item? If you claim it’s one-of-a-kind and it’s really not, customers will wonder why you’re lying and if the alternative is actually better.
Just because you’re super unique doesn’t mean you can charge an arm and a leg, though. You still want to give them a good deal, since that’s one major factor that will keep them coming back for more.
4. Think of the Down Times
If you’re currently on a selling spree you may be inclined to price a little lower than usual. After all, they’re moving like hotcakes, so why wouldn’t you lower the price to keep the streak going? The problem here is this streak won’t continue forever. You WILL hit a slump at some point in the future, and more than likely will experience a slow period every year. Does your current cost take this into consideration, especially since customers will likely balk at a sudden price increase?
5. Package Deals
You don’t always have to think in such strictly singular terms. Sometimes items just scream out to you they belong in a bundle. While it initially seems like you would make more money selling them individually, it all comes down to profit margins.
Would you move more stock and make more money by bundling items, like batteries with an electronic device? If so, go for it!
What is one strategy you use to price your products?