Pricing question

[Nickerz]

Im getting ready to jump in a pretty competive but still manageable industry. An example competitor would price an item with a $391.91 MSRP for $275 including free shipping. Cost on the item would be around $240 with around $10 shipping. On ebay the item would probably be listed for $255 shipped.

Considering I wan't to get into this to make a living and not starve to death I have to go back to what I've learned in sales... cost is not the only objection.

My thoughts on an item like this would be to price it at what is refered to as jobber pricing in my industry

$293

With free shipping

And then to draw traffic advertise draw in traffic via forums with extremely low margins in the hope someone will impulse buy at a decent margin. Google traffic would also feed through as well. This would let me actually be able to throw in free shirts, hats, other products for free kinda suprise the customer and still be able to eat... you know :)

Any thoughts on the idea? Or is it just a better idea to price right there with the competion?

[HRoth]

So are you saying you will gross $25 on an item you have to pay $250 for? To me this kind of margin breaks all the rules of selling. It ties up a large amount of money per item. The profit margin is tiny. How much work do you have to do to get a sale? Remember you have to pay yourself per hour for that work and that is part of its cost.

There are a few things I sell that involve a hefty investment on my part. The only reason why I sell them is because people who buy them buy other things from me that have a much better profit margin. That doesn't sound like that would be the case for you. You could invest that money in a CD and get almost as good a profit as this and have no operating expenses at all.

[Nickerz]

well see thats what im saying, My plan is not to have everything in my actual store as obscenely priced so low. Draw them in with the "door busters" and hopefully make some money on other items in the store. The overall idea is not to be doing retail main order stuff for long, I have to use it to get a name and some clientell. From there it's going to be service related, were the gross is still there by far!