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KenB, I get your point about a 'free market system', but there's a difference between selling something that requires zero maintenance (and almost zero knowledge), and a higher end product that requires both.
[edited by: rise2it at 5:56 am (utc) on Feb 17, 2010]
KenB's point is that at this point the customer wins, which is true at the time of purchase, but not when the customer needs help or service, and no one wants to service that customer because the sale of that item is no longer profitable to any of the merchants.
Seriously DB, the truth is that the pie is only so large, and is going to get divided between the top 5 or 10 guys online in your niche.
As far as online, we have (in this horrible economy): (1)raised our shipping (for orders that don't hit free shipping points), and show it on every webpage.
(2)For the first time, displayed a giant logo stating a MINIMUM SIZE for telephone orders
(3) Put value added services on our high end products.
(4) We've made it much plainer there are some products we do not stock.
The result: daily orders are down, total sales volume is up, average order size is up...average size for telephone orders is WAY up, net profit per sale has almost doubled, and silly calls/emails are going down.
sorry DB, that seems to be a contradiction, probably just me, do you mean that you will or won't compete with price cutters next time(Like I said probably just me)
If the market says that XYZ widget should sell for $100, I'm not going to insist on charging $200 and sell nothing.
If I were not making what I consider to be a comfortable profit, I'd raise my prices
You could not sit still and just say the competitor was making nothing, so just keep prices high and don't worry about it.