If you have an online retail site at home, you might be wondering how to price your items in order to make a decent profit but also to encourage sales from the consumer. It can be a difficult balance between gaining a decent profit margin and selling items at a reasonable price, but this can be easily worked out using the following tips.
We all know that ecommerce pricing can be a challenge, but the first thing you need to consider is making money for yourself and your business. The whole reason that you own a business is so that you can make money to support yourself and your family, so this must take the first priority when it comes to deciding on prices. You must be able to generate enough revenue from selling an item to be able to grow and expand your business, not just to break even.
Know Your Customer
The next factor to consider when you are going to be pricing your items to sell is what your customers want and what they can afford. If you are going to be selling to middle or upper class folk who don’t have to worry about money, then you do not need to worry too much about pricing. However, if your target audience is families with young children, you might want to consider what people in this position can afford. Take some time to research your target audience to see what kind of people they are, what interests they have and what kind of product they will usually go for. This will give you an insight into your customer base and allow you to target your product specifically for them.
Know Your Costs
It is crucial when you are planning what to sell an item for that you know every cost that went into producing it. This will include materials, transport, electricity used by assembly machines, labor cost and the shipping. You will have to make sure that the price you set is worth all of the work you put into making the item. Never scrimp on the materials that you use to make your products. Keep the same level of quality you want and if this means you have to increase the price, so be it.
Know Your Competition
As with any type of business, you will need to take a step back and size up your competition. If you have a few companies who are selling the same type of product as you, look at the prices they are offering their items at and use this to influence the price you set for the product. Also, make sure that you keep your price at a profitable level. Check if their products seem to be at the same level of quality as yours, and if they are you will want to try to match their price as much as you can, if not go lower to attract the audience you need.