One of the biggest marketing decisions you’ll make for your online store involves product pricing. In other words, how much will you charge customers for each product that you’re selling?
While it’s tempting to arbitrarily set prices, or just take inspiration from your competitors, you should diligently make solid pricing decisions to ensure that you’re covering your costs and making a profit. This can admittedly take some time, but it’s well worth the investment. To help keep your pricing strategy on track, watch today’s episode for five major elements to keep in mind before putting your items up for sale.
-Matt Winn, Volusion
Here’s the transcript if you’d like to read along:
Now that you’ve figured out what products you’re going to sell online, the next step is to figure out how much you’re going to charge for them. This is a really important decision, so pay close attention because I’ve got five big factors to consider when pricing your online products.
First off, consider your overall product cost, which is different from the simple cost of obtaining your product from the manufacturer or wholesaler. Factors toward your overall product cost can include the cost of merchandising a product and other bills you have to pay to keep the lights on. In other words, what are all of the costs involved in getting your product out to market?
Secondly, make sure to consider your overall revenue goals. In other words, how much money do you want to make in a certain time period? From there, determine how much each of your products will contribute to that goal. Unfortunately, you’re going to have to do some math here, but the idea is to make sure that each piece of the pie is contributing to the whole.
Thirdly, consider your customers’ motivations for coming to your ecommerce site. For example, are you a cost leader where people come to your site to save money, or are you a high end luxury brand where people purchase your products for status? Making this decision will help you to determine if you need to be charging more or less for your products.
Fourth, consider your value-adds. For example, do you offer superior customer service? People will pay more for that. Do you offer informational or educational content? Is your product really that much better than everyone else’s? These are all instances of value-adds, so be sure to factor them into your pricing decisions as well.
Lastly, you want to always keep in mind what the competition is doing. Make sure that you’re on par, and not too far above or below your competition. Check out various sites, as well as comparison shopping engines to get a good barometer of where you stand with the competition.
Be sure to keep these five factors in mind when you’re making your pricing decisions, as they’ll help keep you on the right track from over- or underpricing your products.
If you have any questions, we’re always happy to help – just leave me a comment in the box below and I’ll be happy to get back to you.
From me to you, happy selling!