Pricing your Online Boutique Products
If you are new to selling goods to customers, one of the most challenging decisions to make is how to price your products. You want and need to make profit, but you don’t want to price yourself out of the market or be much higher than the competitors. Most retailers start with a percentage margin (like make 30% on every item) but there are a number of key factors to consider before determining if this is too high or too low of a price. And to make matters worse depending on your products, prices can greatly vary from store to store for instance a shirt can have $15 at one site and $50 on another site.
Below we have discussed some of the key factors to consider before setting prices for your products. These factors are important to consider before you finalize your product pricing because it can greatly affect what you will earn at the end of the day.
Look at Your Competition
Look at similar products you will be competing against in order to determine how to price your products. Research how many products there are in the market, how they are similar to your products, how long they have been on the market, and obviously how these products are priced. When determining who is really your competitor make sure you also consider the culture and target audience of the competitor’s site. There will always be someone more or less expensive than you so you don’t want to have a Macy’s type business trying to compare to Walmart prices. People are willing to pay for quality if the perception is there. You will notice other details when you start doing research so pay attention to all aspects of their sites. You don’t want to mimic the pricing of another product, but consider the perceived value that a customer is getting.
Know Your Audience
You most likely decided to formulate and design your products because you saw a need for them, right? Knowing who your target audience is will help you decide on how to price your products. Is it a mother? Family? Man? Woman? Child? Or, is it for multiple audiences? Teens and children often have limited money to spend, so trying to overprice your products may be detrimental while mothers like convenience so packaged items and pricing can really get more sales.
Since you are the engineer of your products, you will understand the true quality. This will determine key factors when deciding how to price your products. Will your products fall apart quickly? Are these consumables? Are there other products that are higher in quality? Are these the best products in the market? How you price your products will communicate the answers of some of these questions to your customers. Potential buyers probably won’t get to try out your products before they purchase them and you also don’t want them to assume your products are high quality when they are actually overpriced. This will keep them from becoming a repeat customer. A really important part of using quality in your price equation is to make sure it’s also communicated in your product description. If you are using higher priced supplies to produce the item, communicate it in the description and title (if possible). For instance, Marble Topped End Table, this end table is made with the finest cherry oak wood and topped with imported marble slab.
Consider how many of the products you need to sell in order to make profit. Don’t under price the products or you could lose sales and have to end production. How to price your products will also depend on your marketing and advertising efforts. The brand image will communicate the quality and which audience they will appeal to.
What it Costs to Produce the Products?
Instead of blindly choosing a price for products, you need to total up the cost of design, engineering, manufacturing, advertising, etc. Then divide it by the number you hope to sell to determine how much each unit cost you. Normally, the more you sell, the less it costs. This should be one of the main questions when determining how to price your products.
Where the Marketing is Heading
Consider the state of the market and the trends. If you are selling a new line of pop, it may be challenging to appeal to families that are turning to healthier drinks. But, if you are selling a new line of organic fruit juice with no added sugar, this may be more appealing to families. Market trends will show what customers value and how much they are willing to spend. This is a major factor in figuring out how to price your products.