How to price your items

One of the secrets to business success is pricing your products right. Price your products correctly and that can enhance how much you sell. There's no one universal formula that may suit all types of products, businesses or markets. Pricing your product usually involves considering certain key factors like your target customer, monitoring competitors and understanding the relationship between quality and price.

Customer feedback

One essential part of pricing correctly is getting to know your customers and their purchasing preferences. As a business owner you should value the feedback you collect from your customers. There are certain practices you can use in order to get the attention of your target consumer and get to know their needs. If you would like to get into the details of customer feedback you can read more about it in our blog.

A customer may complain about pricing and after several missed sales, you may adjust prices. Do not take it personal as this is not a review of your work and effort put in it but more as a priceless tip on how you are doing on the market. However, customer needs are different that is why you must first decide who is your target customer and tend to his/hers specific needs. When gather the feedback from your target audience act on it. Do not forget to track your results and if necessary provide discounts especially for the customers that get in touch with you. This will make them feel that extra care has been put towards them and that their feedback matters.

Monitor your competitors

One simple way to ensure your prices are fair is to look at other sellers in your niche. Find at least 5 sellers who are selling items similar to yours and find the average price. This will be a good starting point to have in mind. Check and compare their products to yours, having in mind the quality, the materials, the time for production and all other aspects that have impact on the costs. Compare and evaluate to the finest details in order to get the bigger picture.

You have to make sure that you are one step ahead of your competitors and that you provide something of a great value that can compete. It’s too easy nowadays for your customers to search for the same or similar products and find comparative pricing. That is why you should always check and re-evaluate prices in order to stay competitive in the market.

Budget plan

In order to start own business one have to have in mind how much will it cost for the production, organization, delivery, marketing, etc. Also, you should have a target in mind. How much you would like to earn? How much you would like to sell? You have to make a realistic assumption and a plan. Every seller should have in mind the precise budget they are willing to spare in order to have sales. Having a budget plan will keep you to the point and ahead of the other sellers out there, as you will not only have metrics to which you keep in line but you will be able to master your budget according to your specific business needs. We will soon add another blog post for mastering the budget plan.

Plan your spendings carefully and know the exact value of materials used, delivery and do not forget to add your own hourly rate for the work. Knowing the exact cost of your supplies, delivery and your time will help you make an estimate of what you can expect to collect for a period of time.

Value your work but do not overprice

If your price includes only material costs, you’re not paying yourself for your labor costs. Take care not to lower extremely your price in order to get more sales. This will not only broke your budget, but it may label your brand as a “cheap” one. Here is a formula many small business owners and artisans use:

Supplies + Your Time = Item Cost

Item Cost x Markup (between 2.0 – 2.5 or more) = Wholesale Price

Wholesale Price x Markup = Retail Price

However, here are several points you should consider beforehand:

1. When you already made your investigation in your niche and have found similar products you should start to compare the supplies used.
2. You also should have in mind how much time and efforts will be put into place for creating an item. Can you stay competitive and offer the same price as other artisans in the niche? Or no? Can you lower your markup?
3. Perhaps you can get more creative and offer something more to the customer in order to stay competitive?

* Markup is the ratio between the cost of a good or service and its selling price. It is expressed as a percentage over the cost. A markup is added onto the total cost incurred by the producer of a good or service in order to cover the costs of doing business and create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and distribute a product.

Shipping Fees

On sites like eBay, delivery is more or less non-optional, so gouging your customers with unrealistic shipping fees will only turn them away from your listing. There is another article explaining the main points when setting up a shipment here. There are many e-commerce platforms out there that provide free shipping goods that customers have come to expect it. If you can provide your customers with less or no shipping fee you should really go for it as delivery costs are among the top 3 reasons for cart abandonment.

Don’t expect to get it right the first time. Think about all of the products that companies with expert marketing teams put in front of the consumer only to watch them fail miserably. Owning a business is all about responding to what the market throws at you. As long as you’re doing that, you’ll find success. Read more posts from Chopni on https://www.chopni.com/blog