Yesterday we discussed the 4 Types of Pricing Strategies. Today we are going to dig deeper so you can decide what is best for you.

As mentioned yesterday, there is no "set price" that is best for everyone.  NO, you DO NOT need to buy a book about pricing or pay for an online class.  These things are a total waste of money because there's so many factors that go into pricing.  Let's start by looking at pricing facts:

FACTS:

1. You do not need a “set markup”. Not EVERYTHING you sell should be marked up a certain dollar amount or a certain percentage.  If you are looking for a successful online seller to tell you the magical markup amount, you will end up with terrible advice from an uneducated seller because a "set markup" simply doesn't exist. 

2. Items YOU think are stupid, ugly, obscene or even immoral should not be priced less than items you personally love. You are not the King (or Queen) of What People Like - trust me, this takes a long time to learn. I think almost all new sellers think they need to “dump” items that they personally think “nobody will ever buy”. I can honestly tell you that there’s been items I loved that took 8 months to sell and there’s been items I thought were the worst ever that sold out as soon as they were listed.

3. Under Pricing is just as bad as over-pricing. Previously we Discussed the Dangers of Under Pricing. To briefly review, we explained that if the price is too low, people auto-assume that “there must be SOMETHING wrong with it!”. Here’s the perfect example:

In the image above, the two hoodies are literally the exact same hoodie, worn by different male models, with insanely different prices. The $2.02 hoodie is just way too cheap; the potential buyer instantly thinks it must be a counterfeit or that the seller is a scammer who will never ship. But, by raising the price, correcting the title and adjusting the contrast in the photo, you can make a lot more money off the same item:

Here's the end result, after the title has been revised, contrast has been correct and price has been RAISED (<--- NOT LOWERED!!!) :

Now that you see those two listings again, which would you buy? 

4. You do not NEED giant markups / profit to make REAL money.  Back in June we posted an article called How Much Money Do Online Sellers Actually Make? And in this article we looked at the results from a survey taken of online sellers and what their yearly earning are:

In addition to what their Average Profit Margin is:

As you can see, a 20% - 50% Profit Margin is, by far, the most common (This means that if you paid $10 for an item you are marking it up to $15 or less). However, I often chat with new sellers who are expecting to make 400% or more on every item (meaning, if they paid $10 for the item, they want to sell it for $50 or more so they “make” $35+ off each item), yet they are incredibly frustrated that their merchandise isn’t selling. Then, unfortunately, they blame the items, when, in reality, the items are great.

A while ago I made this chart to show you what earnings you can make off of a small $5 markup:

In the chart above I estimated “Costs” to be 20% (listing fees, closing fees, payment processing, etc). You can adjust the number however needed. 20% was just an easy number to work with. With that being said, as you can see, if you sell 1,000 items a month (thats 33 per day, at only $5 markup), you would bring in approximately $48,000 a year. This doesn’t mean that EVERY item you have should be $5 markup. But what it does show is that you can make actual money off of a very small markup. The key to being able to sell $48,000 profit worth of $5 markup items is to have Duplicates. I strongly encourage you to read our article called How to Take Your Online Business to The Next Level.

5. Instead of aiming for the lowest price, LEARN YOUR CUSTOMER. Male and Female shoppers are surprisingly completely different. By simply learning about your customers you will increase your sales without having the lowest price. Here’s a couple fantastic pieces of content to read:

Amazing Statistics Every Womens Panty / Underwear Online Seller Must Know!

Amazing Statistics Every Online Bra Seller Must Know!

Surprising Shapewear Statistics Every Online Seller Must Know

Do Kids Items with Characters / Brand Logos Sell Best? Sell This, Not That Series

How to Increase Your Womens Clothing Sales - Amazing Data About Female Shopping Patterns

How to Increase Your Mens Clothing Sales - Fascinating Data About Male Shopping Patterns

How People Choose What Clothing to Buy - Internesting Statistics for Online Sellers!

10 AMAZING Facts About Childrens Clothing Purchases - Sell This, Not That!

9 Insane Facts About How Much Americans LOVE to Shop!

What Do Men and Women Shop For Online? Amazing eCommerce Statistics!

A penny saved REALLY IS a penny earned. If you cut your costs you can sell items for less and actually MAKE MORE. 

As a quick example; you can replace you regular printer with a Thermal Printer and instantly cut the cost of every single shipping label you print.  If you are currently only selling 1-2 items per day (30 to 60 items a month), by eliminating the cost of ink (thermal printers print using HEAT! No ink needed) and by having a label fully print in literally .05 seconds instead of 40 seconds; the amount of time and money you save over 12 months in an insane amount!  The more TIME you save, the more you can list and ship.  All of these little amounts end up totaling GIANT amounts at the end of the year!  This may blow your mind, but if your printer currently takes around 1 minute to spit out a label (15 seconds "warm up +30 - 40 seconds print time), and if you ship only 30 total items a month, in 12 months time you will have spent 6 HOURS waiting for postage to print!  That's almost a full work day! And, if you then take the time to TAPE the label onto the parcel.... the costs keep going up and up and up.  Not to mention the cost of ink, tape and paper!  Changing a normal printer to a thermal printer can easily save you  literally hundreds to thousands of dollars per year, depending on how much you ship.  No paper jams, never run out of ink, never watch a label print, "never" replace (we have had our same thermal printers for over 8 YEARS and they still work perfect).  By saving money on literally every single order, you can price lower and lose NOTHING.  (Zebra Thermal Printers are AMAZZZZING! That is the only brand we use!  Check out the Zebra Thermal on Amazon) 

We have so much content about cutting costs, but here’s a few must-reads

Why Retail Arbitrage Doesn’t Make Sen$e

Complete Guide to Shipping (You Don’t Realize You’re Wasting Money!)

NEVER Throw Out Damaged InventoryLearn about Tax Write-Offs! You're literally throwing away money!

And you can find TONS more content on our wholesale buyer blog

6. It is easier to LOWER the price than to RAISE.  If you over-price you can always discount, but if you underprice then increase the cost, buyers will be livid.  Heck, our buyers complain even if we are forced to raise the price because our cost increased.  

7. LEARNING IS EARNING.  It sounds super cheesy, but it's so beyond true.  If I can make a suggestion, start by pricing low and work your way up to a price that still sells quickly but also leaves room for profit.  So, let's say you pay $4.99 for something that retails for $30.  You can start off by trying to sell it for $9.99 - $19.99.  If there's few / no other listings for this item then you can safely aim for under $20.  If there's lots of listings, see how much other sellers are posting theirs for.  If they have their listed at $5.99, make you listing nicer and price at $8.99 or $9.99.  If all else fails, price yours at $8.99 but include a FREEBIE with your item; for example "Material Girl Active Tank Top +FREE GYM HEADBAND" - it's usually cheaper to offer a package deal than to take money off of the sell price but the 85 cents the headband cost you can bring in an additional $5 or more on the sale.