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What Pricing Methods Do You Use For Products?
olimits7

5+ Year Member



 
Msg#: 3780800 posted 7:24 pm on Nov 5, 2008 (gmt 0)

Hi,

I was just wondering, what pricing methods do you use to price products on your website?

1. Do you use a percent (%) or ($) flat fee mark-up and apply it to a wholesaler price?
2. Use a retail price and subtract a percent (%) or ($) flat fee mark-down?
3. Include any other charges like overhead, merchant fees, etc...?

I'm currently using a percent (%) markup on a wholesale price and also including a flat fee ($) overheard charge.

Thank you,

olimits7

 

arieng

5+ Year Member



 
Msg#: 3780800 posted 8:43 pm on Nov 5, 2008 (gmt 0)

4. Do competitive research and price relative to others in the market.

I use target % margins for different categories of products, but always check out the competition. Sometimes you need to accept less to remain competitive. Other times you can bump up your prices and still be under everyone else.

jecasc

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3780800 posted 8:09 am on Nov 6, 2008 (gmt 0)

2. Use a retail price and subtract a percent (%) or ($) flat fee mark-down?

I simply use the recommended retail price. Without subtracting any percentage. Why should I give away money?

If I subtract 15% of the recommended retail price - like many of my competitors do - I need to double my sales to make the same profit.

I rather compete on service, website usability, shipping time and other factors. Since my clientele is not very price sensitive anyway this works fine for me.

dickbaker

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3780800 posted 11:34 pm on Nov 6, 2008 (gmt 0)

Shoppers in my niche tend to be notoriously cheap*, and expect low price as well as great service. The products themselves are all from the same manufacturers, so quality depends upon the brand.

Because my online store is new, I believe I need to be competitive in price. There are limits to how little margin I'll accept, but I try to be as competitive as possible.

Many retailers in my niche are selling items for just a couple of bucks over my cost. Where that's the case, I just don't carry those items. On the other hand, my distributor gets favorable pricing from the manufacturer, I'm able to be competitive on price but still make a good margin.

It's not easy.

*Example: at a niche-related public widget show, one of the dealers strung a four-foot length of clothes line across his table, and hung crisp new $1 bills on it with a price tag of 90 cents. People came to the table and asked, "what's wrong with them?" "Nothing," the dealer replied. Many customers tried to chew him down on price.

Essex_boy

WebmasterWorld Senior Member essex_boy us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3780800 posted 8:09 am on Nov 11, 2008 (gmt 0)

Depends, ive two sites one with unique products that very few others sell over the web, the margins are 300% plus on that site, oddly I didnt sell much from here untill I did whack up the price. The other sells silver gifts and general itemms margins are around 100%.

Ive sold toys on teh web with margins of 30% so product mark ups depend on your business, if customers perceive an iten to be a luxury then they ll pay through the nose

giftedwon

5+ Year Member



 
Msg#: 3780800 posted 7:09 am on Nov 17, 2008 (gmt 0)

i search for my competition in google shopping and i go lower then the lowest price :)

Philip_M

10+ Year Member



 
Msg#: 3780800 posted 8:03 pm on Nov 19, 2008 (gmt 0)

i search for my competition in google shopping and i go lower then the lowest price :)

Wow! I wish I had thought of that! But what heppens when an even bigger idiot does the same thing?

HugeNerd

5+ Year Member



 
Msg#: 3780800 posted 8:04 pm on Nov 19, 2008 (gmt 0)

Wow! I wish I had thought of that! But what heppens when an even bigger idiot does the same thing?

You search on google and lower again!

dickbaker

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3780800 posted 11:21 pm on Nov 19, 2008 (gmt 0)

What price do you put on your time?

In order to put items on my store, I have to write fresh content. I have to size and sometimes retouch photos. It can take a half hour to an hour to add a single product.

Then there's the time involved in selling: SEO work, processing the transaction, talking to the customer or shooting emails back and forth. Then there's the book keeping.

All of that isn't worth $5 profit on an item.

Shaddows

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3780800 posted 9:24 am on Nov 20, 2008 (gmt 0)

Ah, but is it worth a $5 profit per sale, with multiple sales per day.

Take a nominal value for your time, and an average of how much time you are not directly earning money (for me, thats most of my time), and build that in to your Overhead.

Analyse how many units you sell per day.Then price your goods in such a way as to cover your direct costs plus overheads plus make a reasonable profit.

It then follows that as you sell more, overheads drop as a proportion of costs, so your prices can come down and still make the same RATE of profit.

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