How should I price my products for my online store?
I recently got my very first batch of items that I'm planning to launch on my website. I am having trouble pricing the items, is there a formula I could use for this matter?
The way I was going about it is I added the cost of the item + the shipping & clearance + my profit margin, is this way correct or am I missing something?
Thank you in advance.
Search for each product you have on google. You will see same product being sold in the top results of the google. Note down all the prices on different sites. Now choose the lowest possible price and try to keep your selling price below that. As you are launching your website, the only area you can compete with established ecommerce businesses around your location selling same products is by selling it cheap.
Brick and mortar businesses think that their online counterparts own some magic wand to make more sales and profits. Online shops on the other hand try hardest to match up with the level of in-store customer experience. In fact they try hard to figure out how small business owners earn customer trust and loyalty. I too pondered on the question for a long time, and came to the conclusion that both sail in the same boat and the answers to their problems are too somewhat similar.
The point is that if you want product sales and customer loyalty, then, it doesn’t matter if you are online or offline. Both the worlds have same rules.
For complete information read on: http://www.fatbit.com/fab/product-selling-customer-experience-rules-similar-online-offline/
I'm assuming you are a retailer and that's the reason of your pricing formula. I also assume that you are the only person working in your online store. The way how I price my products is to always consider having someone to do all or some of the work (ordering, bookkeeping, website updating etc) or other costs (like when you have a small office/warehouse, electricity, internet connection costs, etc). By doing so you will know how much revenue you really need. Although this is not a very big concern since you are still starting up, it is best to have that thought in mind. I cringe when people don't think about other costs then they start expanding.
You can, of course, add those additional costs to your price later, but just as what Deepak says, product sales and customer loyalty matters. Not saying it is bad practice to change your price later, but it is best to be on top of any concerns that may arise in the future.
Another aspect you have to consider is your tax. I don't know your tax laws in your country, but it's always best to know and understand your tax laws.
I would recommend you to first of all Google about the product. Once, you have all the info, you can talk to other people who are experienced in this field. Btw, Google is the best source or friend to get answer of anything.
Have a nice day.