A good pricing strategy is a key to success for any online business. You need to list your items so they fall into that perfect category to please both you and your customers.
The ideal price will be competitive within your market, yet not too cheap that you can’t make any money. You want to provide great value for your customers while making as much from every sale as you possibly can.
Understandably, this is a tricky thing to accomplish as it is hard to price products. Many things must be considered and taken into consideration, and here are some ideas on how you can develop a better pricing strategy:
Research the competition
Start by looking at your competitors and other businesses selling the same products as you. What are they selling their items for? Realistically, you should see that most businesses sell the same products for around the same price.
As such, it’s a bit risky to list your items for more than this. Why will customers buy your products if they are more expensive than the rest of your rivals? Well, this brings us to the second point…
Create a USP
Try to develop a unique selling point for your products/service. This is something that no other business provides its customers.
By doing this, you open the door to list your products for slightly more than other people.
Perhaps you use technology that’s unique to your product, therefore, people can only take advantage of it if they buy from you, letting you command a higher price. Or, it doesn’t have to be anything to do with the product – you could offer free delivery or much faster delivery on your products.
Customers are often more willing to spend a bit more if it means they get a product with no delivery fees and a faster delivery time. Regardless, a USP helps you get a bit more from your products, allowing you to set a more rewarding price.
Read also: 5 Tips on How to Create and Sell Online Courses
Figure out your expenses
Naturally, you can’t create a pricing strategy without learning how much it costs for you to sell your products. If you are making them from scratch, this will include all of the manufacturing materials, labour costs, etc. If you source them from elsewhere, you need to work out how much it costs for you to purchase the products.
All of this can easily be achieved with some basic eCommerce accounting software, outlining all of your expenses in a chart for you to see. From here, you understand the bare minimum that you can price things for to break even.
You don’t want to do this, however; you want to price your products so you can actually make a profit. Once you’ve figured out your expenses, you can go back to the first point and look at your research.
You may find that the cost of acquiring your products is so extremely low that you can list your products for the industry average and still make a massive profit. Or, even better, you can afford to undercut your rivals and still make a profit. That’s the ideal situation for any eCommerce business; you sell things for cheaper prices than your competitors, yet still manage to make a lot of money.
Of course, the opposite can be true; you might have high expenses, meaning you need a higher price to make a profit. In which case, you refer back to the second point and develop a USP to provide value for customers. It means they gain something from the higher price, encouraging people to still buy from you and allowing you to make a profit.
Keep your eyes and ears peeled
After following the first few tips, you are in a good position to set prices for your products. You know how much it costs you to sell the products, and you know the average price for the products.
Nevertheless, this isn’t the end of your pricing strategy! No, rarely will you find something listed at a price forever. Markets change and other factors come into play that can mean your products become more or less valuable.
Consequently, you need to keep your eyes and ears peeled for any changes within your market.
Are all of your rivals suddenly lowering or increasing their prices? If you start selling an updated version of a product, you’ll have to lower the price of the older one. Things like this need to be kept an eye on to ensure you’re always setting a competitive price.
Keeping all of this in mind, you now know how to set the right price for your products, entice new customers and keep your current ones happy!