Don’t you like to increase your online sale? Yes, you do. It is a mindset that differentiates you from a customer to an entrepreneur if you want to successfully sell your product online; one of the major factors determining your success is How to price your product.
All your efforts to stand-out through the right marketing and customer retention tricks might turn back on you if you fail to determine how to price your product right. Right now, you may be under-selling your product and cutting off your own profit.
On the other hand, if you are wondering why the sales are not rolling in as you expected, maybe you will find the reason in the way you price your product.
Factors can be countless, but we are here to share the solution you have been looking for. If you want to sell your product online, here are 5 ways to Price your product right to increase your sales online.
5 Ways to Price your Product Right to Increase Online Sales
Fixing your Margins
Let’s start by clearing our basics. If you need to make a Profit, you will need to sell your product at a higher price than what you bought it for. But this isn’t as elaborate as it should be.
In addition to the cost you bought a product to sell it online (or the cost of manufacturing your product), you shall also add miscellaneous charges, transport, wages, marketing, storage cost, and every bill you are paying.
You can just sum up your bills regarding the product, add them up, and divide it by the number of products. That’s the real cost that you will be paying for each product.
The next step is to determine your margin of profit. This is a bit tricky, but hold on, you will get the point. Margin is a percentage of the cost that you desire to earn through selling a product.
To make it easy for you, let’s go through an example:
- Cost of your Product(including every bill as we discussed) = $100
You wish to get 20% of the profit so, as per the calculation your selling price will be $120 ($20 would be your profit)
In order to sell your product online and grow your finances successfully, margins should never be compromised. Now let us understand how to determine the margin?
Add the discounted Price.
Tellus one thing? Why do people prefer to buy from Amazon or eBay or for instance any of the eCommerce giants? All eCommerce provides good home delivery, maybe good customer service, and also they market themselves well.
You know where we are getting to. It’s the sale that they offer you. They drop the prices and increase profit through the number of sales thesis points, which vary for every industry. To increase your online brand, discounts can play a very important role.
But you shouldn’t cut off your profit at that time too. How? By including the margin in the cost itself. If you wish to price your product and make sure that any kind of loss is minimized, you shall add the discount margin in the cost of your product itself.
Are you also thinking, why would a customer be interested in buying a product from you if all this is included if you product price? That is due to your USP.
Know Your USP
If you are a new eCommerce entrepreneur looking to make a name of yourself, you need to find your own USP. USP or Unique Selling Point is an advantage that differs from other competitors. Also, a POP is Point Of Parity, a common ground that you share with your competitor to price your product right and increase your sale online simultaneously; you need to make yourself stand out. And your USP can be as simple as faster delivery, better customer service, a fast and friendly website, better product images, or anything that makes you different.
Your point of parity will bring you traffic, but you can convert that traffic into customers if you use the right users. Next, let’s understand and how to build your own USP.
Understand your customer perception
If you are in a search of a USP on the internet, you may bluntly fail. This is as true as the moon and sun. USP isn’t something that a blog can list out for you. It’s something that depends on your targeted customer.
Having a buyer persona tells you what your customers are, what they like, who they buy, and much more can really help build your own USP.
If you find out that your customer is also concerned about the environment, simply having a recyclable product can give you an edgeEvenen if you price your product more and deliver a product that they are expecting, young can increase your sale online drastically.
Observe your competition
Fifth and the most important point is to keep a side-eye on your customer. Keeping a note of what your competitors are doing and how you can outrank them. To price your product, you shall see if they are increasing the price or dropping it.
If so check if you need it too or not. In addition, you may also see which pricing tactics they are using. The right pricing tactic is as important as you price your product. Moreover, if you are just starting out and want to sell your product online, you can watch out for your competition and see how you can increase your sale online by practicing the right tactics.
4 Common Pricing Tactics
1. Charm Pricing
We all have fallen for this pricing tactic used by nearly every eCommerce. In it, a single penny or two removed from the rounded price. For eg. If the cost is $1000, it would have written $999. You may see variants but it’s all about removing a minute portion. You shall use too to sell your product online and increase your sale online. This has given a 100% increase in conversion so you can’t overlook it either.
2. Skim Pricing
If you are new and want to sell your product online, or are introducing it as a new product and want to sell your product online, Skim Pricing can help you to increase your sales online like a rocket.
When introducing a product, the prices are kept high, and later the price drop is seen after 6 months or so. When the prices are higher, you shall target early-adopters and status-conscious buyers.
Later, when the price drops, you shall target the budget-friendly segment of your niche. When you sell your product online using Skim pricing, you can price your product very analytically and increase your sale online.
3. Anchor Pricing
This is an add-on to the Skim pricing. To increase your sale online, you shall disclose the product’s actual price against the new discounted price they will be getting. If you price your product with this tactic shall see a spike in your growth.
4. Loss Leader Pricing
To increase your sale online, you can also use Loss leader pricing. But you shall need good finance to support you if things go south. To increase your sale online, you can sell your product at a loss to compensate by volume. Amazon and many huge eCommerce stores use it, but the risk is exceptionally very high.
Your Next Step
To increase your sale online, you need not be the master of the finances, but if you could just price your product right, you can create a difference. Along with the tactics mentioned above, you shall start your journey by calculating the cost and use them to increase your sale online.
Moreover, as you read how to price your product right and increase your sale online, we recommend you read Everything about customer retention techniques that can help you sell your product online successfully.
Bio: Chetan Menaria is Partnership & Collaboration Manager at PixelPhant, an eCommerce & fashion photo editing service provider. PixelPhant edit product images to make them look professional & eCommerce ready. Loves to learn new things every day, read something all the time, never miss the sunset & do Product Designing & Create content.