If you’re pricing your products, you don’t have to be the lowest price to make great sales. Regardless of your distribution methods, consider these pricing tips:
Should you sell it now?
Snowboards don’t sell in summertime. To everything, there is a season. Consider the optimal buying cycle for your product or service before you begin promoting.
Identify your costs
Consider more than the difference between wholesale and retail. Don’t forget to factor these issues into your price: merchant bank transactions, warehousing, advertising, commissions, shipping, customer service, returned goods, etc.
Monitor the competition
Be sure you are comparing pricing with the right competitor, not every competitor. Their price today may also change. Are they offering seasonal or promotional discounts or value-added services? Keep an eye on their pricing on a regular basis to get a realistic baseline.
Will anybody really buy it?
If your product is common, pricing should be based on the perceived value of your brand. If you are selling something unique, make sure there is a market for it first – try focus groups, customer surveys, secondary research, word of mouth campaigns.
Set your price
Take the five lowest prices you collected from your competitors. Calculate your estimated cost, then subtract that from the lowest price. If you don’t see at least a 15% profit, don’t bother.
After you’ve sold an item for a month or two, revise your Cost of Goods Sold. Then reevaluate your competitor pricing information. Measuring past performance is just as important as setting the correct price to begin with.