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I teach online store owners how to crack the code of eCommerce success for a life of uncapped income, flexibility and fun.
Hi, I'm Jodie
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Learn the 5 Major Online Store Mistakes That Are Costing You Sales.
Many online store owners find themselves spending far too much antagonising over.
‘Will I make more sales if my prices are cheaper?’
‘If I set my prices too high will I scare people away?’
‘Would I be better to serve fewer customers but at a higher profit margin?’
These are just a few of the difficult decisions we face as e-commerce business owners.
In order to set your retail price, you need to first consider the following:
You see, if you are planning on targeting teenage girls, trying to sell a $200 beach dress to them is going to be a difficult business model to make succeed.
Your products and prices need to reflect the demographic you are selling them to.
Unless of course, you have built your business and brand around a particular niche or demographic were $200 beach dresses are affordable for your particular teenage market – an affluent suburb or city, or a celebrity market for example. In that case, your price makes sense for the audience you are serving.
I like to add the total costs incurred in producing the items, including shipping and then dividing by the number of units I have ordered.
For example, if the unit price is $15 dollars and I’m ordering 100, the cost for the finished products is $1,500. I then tally up the costs incurred to bring that design to life, shipping samples to/from the factory, screen costs, sample costs and designer costs plus shipping the bulk production to me which might be another $1,500. So my total costs for 100 units in this example is $3,000 – so the true cost of the item to me is $30 dollars. Which is very different from the $15 dollars at first glance, quoted by the factory.
We also need to consider the transaction fees per order, especially if you offer “AfterPay” or similar who can charge up to 8% of the sale price. Be sure to make space in your profit margins for those sneaky ‘Free Shipping’ or ‘10%’ off discounts too!
Don’t forget the need to consider your time in bringing the products to life and selling them which might include an hourly rate calculation.
And lastly, we need to consider advertising and marketing costs required to make the sale! The cost of Facebook ads, for example, is ever-increasing as more businesses join the advertising platform, pushing up the auction price. I can spend up to $60 to get one sale!
When setting your retail price, I encourage you to consider your overall business model. Are you aiming for a volume of sales, ie 100 sales a day at $20 a sale, or a higher value order, with less volume, eg,10 sales a day at $200 an item.
I encourage you to not undervalue your time in bringing your business and products to life and the hidden expenses that eat into our profits.
It’s very tricky to justify raising your prices after the fact unless you’ve made significant “value add”/ modifications to the product your selling.
I hope my tips have given you a realistic base to work from when it comes to calculating your retail prices. If you need an exact formula for pricing your products, feel free to check out my 8-week program Online Store Success, where we delve even deeper into pricing for profits.
Best of luck in your business,
Until next time,