Imagine this: you’ve taken the big leap and you’ve decided to start up your e-commerce store. You’ve got a handful of different products and you’ve got a list of people wanting to purchase from you, but then an important question comes up, “How much should I charge? What is this worth?”
With every online store, the goal is simple: to make a profit. However, the methods used to determine how to make that happen can be stressful. Return on investment. Cost of goods sold. Competitive analysis. Whoa! Pricing your products so you can make money while keeping costs appealing to buyers can feel overwhelming…but it doesn’t have to.
Here are three simple tips to get started pricing your products for your online store:
1. Know your local competition
Do a quick check of the brick-and-mortar stores around you. Do they stock an item that is similar to your product? How much are they charging for it? Often, if a customer can purchase something immediately, they’ll choose that option — especially if the local rate is better than what you can offer.
2. Understand the online market
The beauty of an e-commerce store is that you have search engines like Google® at your fingertips. With a few taps on your keyboard and a couple clicks of the mouse, you will be able to discover how other sellers are listing similar products. The idea is to find a happy balance between what you want to sell your product or service for and what your competitors are doing. In order to be truly successful online, you will want to offer competitively priced, high-quality products that will entice more potential customers to purchase from you.
3. Determine your profit margin
One of the most important aspects in this decision-making process resides in determining your profit margin. There is absolutely no sense in undercutting your competitors’ pricing if it means that you ultimately make no money off your product or service. Take into consideration the amount of time or resources it takes to produce your product, and factor that into your pricing strategy. Need help? Check out some of the free profit margin calculators online!
Launching an online store is an exciting point in your business venture. As you prepare to offer your goods or services to the world, you’ll gain a wealth of knowledge about building a successful Web store, tackling basic business finances, calculating tax rates, understanding shipping methods, and determining the best marketing strategy — like email and social media marketing — for your business. Pricing your products is just one more step on your path to e-commerce success.
Ready, set, sell!