Are you ready to start selling online? Of course you are! Maybe you have been selling for a while and have a bit of uncertainty about the pricing? That’s common too. Most people who are just getting started wonder about how to price their products. If you ask too little, no one will take you seriously but if you ask too much, no one will buy from you. It’s a worry, but there are ways to help yourself. Here are some tips on how to price your products.
Cover your costs
The main thing to remember in pricing is that you do not want to sell at a loss, no matter how much you may want to be competitive. Remember that basic costs include materials, labor, overhead and expenses among other things, like loans and investments to get the business up and running.
Understand the Market
It is important to understand what your customer wants and how much they expect to pay. If you want to know how much other people charge for the same service, check other websites to see, and take note of their pricing, their highest priced items and their special offers. If you can, get your family or friends to be your target customer. Ask them how much they would be willing to pay.
Calculate Your Markup
So, you have determined your costs, and you checked the market. Now, you want to know how much to markup your product. This is the hard part. Your markup percentage is usually between 20% and 50% of the cost per item. In order to decide, turn back to your research of the market trends and remember that the pricing can be changed up or down as needed. Remember your own costs so you know your profit.
Do you know why sales focus on the number on the right side? It’s because charm pricing works. This explains why many products are sold with a price tag ending at .99 cents. The price looks more attractive if the number on the left side is low. For instance, $9.99 looks like a lower price than $10. It seems obvious but it is a tested method that works!
Test as you go
When you are pricing your product, these are the basics. You need to stay competitive, cover your costs and make a profit. You can always change the prices if you need to, but don’t forget to keep track of what your market and your customers think. Always keep an eye on what is going on and what the customer feedback is saying. If production costs increase, your expenses will go up and your product may have to be a bit pricier.
Pricing your products is not a onetime decision. Do the research and know the market so you understand consumer trends and pricing strategies and how they will work for you and your customers. Knowing your cost per item is the most important thing.
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