A number of sellers erroneously think that the lower the prices, the greater the sales. However, when you keep your price too low, you are subconsciously telling the consumer that you are selling a low-quality product or service. So, rather than increase your sales, your low prices actually end up doing the opposite.
So, while pricing your offering, you should pay more attention to what your product is worth rather than what a consumer might pay for it. In this blog, we will discuss some ways to price your product correctly.
Ways to Price Your Product:
1) Pricing according to the market:
A simple way to make sure that you are pricing your product fairly is to look at how other sellers within the niche are pricing their products.
Identify around 4 to 5 sellers who are selling products similar to yours, and calculate the average of their prices. This average might offer you some idea about your own price, but this approach should only be used as a starting point.
2) Pricing according to costs:
Although you might be pretty clear about your margins, you will have to consider all the costs you will endure throughout the process, before you can determine your final price. From inventory and manufacturing to shipping and marketing, online retail comes with a wide range of expenses that impact your final selling price.
You also have to consider the marketplace fees, which can vary greatly depending upon the product(s) that you sell, so make sure that your research is up-to-date before you list your product.
And, make sure that you are not forgetting to factor in your fixed costs, such as payroll, utilities, and office space.
3) Be flexible – use auto-pricing to help you:
As much as you would love to think that you are done after setting your initial price, it would hardly be a realistic thought. Since the market keeps changing, so should your prices.
Having said that, making constant price adjustments can be a real hassle. To ease this job, many Amazon sellers turn to auto-pricing, which makes price modifications based on the changes that other sellers are making. This is an excellent option if yours is an e-commerce brand selling products that face a great deal of competition. By making sure that your prices match those of other similar products available on the marketplace, you increase your chances of getting your hands on the prestigious Amazon Buy-Box.
Use Cloudcafe Technologies to Maximize Each Customer’s Contribution:
Customers view every product as a combination of price and qualities and are constantly comparing product options both within and outside the retailer’s control. Cloudcafe Technologies analytics can help you learn how customers respond to prices for each assortment and find the ideal prices for all items to generate the highest possible profit contribution from every customer.
If you want to know more about how Cloudcafe Technologies can assist you with your pricing decisions and profitability, please feel free to reach out to us.
Cloudcafe is the eCommerce evolution of Aurora Digital which was established in 1998 by Sanjeev Srivastava. Bringing together talent, creativity, and foresight, Cloudcafe utilizes local and offshore development teams to deliver end-to-end solutions. By leveraging high-end technical consulting, custom software development, and our own software, we provide more insight and achieve an all-around better customer experience for our clients.