Perplexity to Profitability: Pricing Your Online Store’s Products to Sell

Jan 8, 2024 | Blog, E-Commerce

How to figure out what price to charge for your products

Setting the right price for your online store can be a bit of a puzzle, especially when you’re just starting out. Here are the top ten things to consider when establishing your product pricing.

1/ Crunch the Numbers

Take a good look at all the costs involved in bringing your products to market. Consider manufacturing, packaging, shipping, and any other expenses you need to cover. Is your supply chain experiencing shortages? Is your product easy to increase production of or source from another vendor? The simple equation of Supplies + Production + Packaging = Product does not reflect other overhead such as storage, production delays, or marketing, so be sure your profit margin accounts for these other expenses.

2/ Spy on Competition

Check out what other online stores are charging for similar products. This will give you a sense of the price range in the market and help you gauge where your products fit in. Be sure to consider your brand’s positioning in the market as well to account for adjustments in pricing.

3/ Showcase Your Value

Think about what makes your products special and why customers should choose them. Highlight your unique features, quality, or any added value you bring to the table.

4/ Understand Your Customers

Get to know your target audience and what they’re willing to pay for products like yours. Are they price-sensitive or more focused on quality and brand? Compare this to your business strategy. Are you seeking to move more units and increase profitability through quantity? Maybe you’re going after customers who prefer to maintain the product longer and it is desireable to buy it once and include a service or maintenance plan. Your positioning can greatly impact customer’s perception.

5/ Set Pricing Goals

Determine what you want to achieve with your pricing strategy. Are you aiming to attract more customers, establish your brand, or maximize profits? Your goals will shape your pricing decisions. These goals should also be reflected in your product production. Nothing turns a customer away faster than a bad review due to shortcomings of a under-delivered promise.

6/ Test the Waters

Start with a reasonable price point and see how customers respond. Monitor your sales and gather feedback to understand if your pricing is hitting the sweet spot or needs adjustment. Consider beta-testing your product with a small group to collect feedback and make edits before widely sharing your offering.

7/ Stay in the Loop

Keep an eye on market trends, changes in costs, and customer preferences. This will help you fine-tune your pricing strategy and stay competitive. This is a habit you can create by staying vigilant in your industry. Understanding what makes you different over your compeition will help you better understand how to price your product without driving the whole market into the toilet.

8/ Leave Room for Incentives

Consider leaving room to offer future incentives like discounts, bundles, or free shipping to entice customers. Be sure you have room to reduce the price and still align with your profitability goals.

9/ Listen to Ideal Customers

Actively seek feedback from your ideal customers. If your current customer base doesn’t align with your ideal customer base, their feedback may not be the advice you want to listen to. Consider completing a market survey with your ideal customer group. What do they think about your pricing? Are there any barriers preventing them from making a purchase? Use this valuable information to make improvements.

Price to Sell

Pricing is subjective. What is “expensive” to one person may be “cheap” to another. So taking all sorts of information into consideration is the best way to give yourselve a range to shoot for including:

  1. Crunch those numbers
  2. Spy on the competition
  3. Showcase your value
  4. Understand your customers
  5. Set your pricing goals
  6. Test the waters
  7. Stay in the loop
  8. Sweeten the deal
  9. Listen to your customers

From there, it’s decision time. Remember, pricing is not set in stone. Be flexible, willing to adapt, and learn from your customers’ behavior. As you gain more experience and data, you’ll become even better at finding that sweet spot that satisfies both your customers and your business.

TLDR: pricing is not set in stone. Be flexible, willing to adapt, and learn from your customers' behavior. As you gain more experience and data, you'll become even better at finding that sweet spot that satisfies both your customers and your business.

Want to Know More? 

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