How To Know How To Price Your Products For Your E-commerce Store

Not too high and not too low. There is a sweet spot when it comes to pricing that you have to figure out to make a lot of money. If you think higher prices means higher revenue, you may be off the mark. Your margins may be higher but your sales might be low since people have cheaper alternatives.

Price too low and you risk losing money or at least having cash flow problems due to a low margin. And you also have people that think your product is not quality made since it seems like the price reflects that.

You’ll need a strategy to get the right price to be able to have a successful E-commerce Store store.

In this article, I will go over several of the criteria you need to be thinking about to price your products in the best way.

Determine costs and profit margin

There are two types of costs that have to be factored into the price of the product. There are set costs and variable costs. The set costs are easy to factor into the price as they are the same every month. Where it gets tricky is when the costs change on a monthly basis and you don’t want to have your prices fluctuate too much.

One thing that can kill conversions is if a person comes to your site and sees the prices have gone up. Even if it is only a temporary rise that will go down as the variable costs lower, it can keep the person from coming back.

When you do a User Experience Audit for E-commerce Store , you find out that people like consistency and this affects your conversions.

The way to go on this is to price to the max of the variable costs and then factor in the profit margin. If the costs go down then you can increase your margin.

Your profit margin should also include your pay as well. So try to think of how much per hour you would want to make if you were working for a wage and then factor that into the profit.

Research the competition

Unfortunately, there may be some competitors out there selling the same product and charging much less than you are. In which case you have a few things to consider.

If your profit margin can handle a bit of a cut then you can lower your price down to near or at the competition. This will keep you competitive and you still make a profit. However, if your margins are thin then this is going to be difficult.

Do you lower your price to stay competitive and settle for a lower profit margin? This is likely not your best option. In this case you may have to find ways to outcompete them even with a higher price point. This can mean adding value to your products or selling bundles so you can add on a lower priced product with a higher profit margin together.