Forum Moderators: buckworks
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 ($) overheard charge.
Thank you,
olimits7
I use target % margins for different categories of products, but always check out the competition. Sometimes you need to accept less to remain competitive. Other times you can bump up your prices and still be under everyone else.
2. Use a retail price and subtract a percent (%) or ($) 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.
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.
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
Wow! I wish I had thought of that! But what heppens when an even bigger idiot does the same thing?
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!
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.
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.
