Knowing How To Product Price

People prefer online shopping for its low pricing and the convenience it offers

. Retailers are able to keep the costs of online retail products low due to minimal overheads and other administrative expenses. This holiday season, especially, when the global economy is still in the initial stages of recovery, no one really wants to spend more than they absolutely have to so it is therefore important for retailers to work out the most competitive pricing strategy to capture the market.

Pricing is a multi faceted component of marketing that has to be determined in a skilful manner keeping in mind a few vital aspects.

One of the first things to remember is the explicit relationship between value of the product and its price. For instance, everyone will surely pay more for the same kind of clothes picked up in an exclusive designer boutique as compared to what you buy in a bargain sale. Here the brand value makes a lot of difference to pricing. Before determining the price point of online retail products it is a good idea to gather data about what the market is willing to spend on your product. Search for your product on eBay or on shopping sites and look closely at the range of prices. Try to understand why the pricing is different. Do some companies offer more service such as free shipping? Or, is there simply variability due to profit motives or differences in wholesale pricing. How do your products fit into the price range?

A second issue that comes into play as you work out your online retail pricing strategy is the amount of competition for a particular product. For instance if there are four or more competitors vying for market for a particular product you sell and only one or two for another product, you may have to use different pricing strategies for each. Dealing with many competitors with product lines in different life cycles can make it difficult to price and can confuse buyers who are struggling to rationalize pricing based on value, service or quality of the product.

Of course your pricing is based on the cost of the goods from your wholesaler. Work hard at getting the best deal you can from your wholesaler. Aim to get discounts as your volume grows, for example.

Online retail product pricing is also significantly affected by your own business economics. Your profit margin must be high enough to sustain your business, based on the volume you sell. It is sometimes realistic to lower the margin for some products and aim to sell at higher volume.

You can also use some merchandising tricks such as bundling, buy two get one free and other bargain hunters attractions that may reduce your profit per item a bit but may be more than made up for by the volume of merchandise that you are able to sell.

Product pricing is one of the most important parts of the online retailers work. The right pricing can attract customers. Being out of step on pricing can create losses. This means that pricing is not a onetime event. You need to be evaluating the market place and making pricing decisions on a regular basis.

by: Jane Dawson

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