http://store.yahoo.com). 90% of my traffic comes from there. When I seek out my competitors, I look for other businesses like mine ONLY in Yahoo Shopping. Then I compare.
If I`m thinking about selling a product, and I get 1,500 hits in 400 stores on that item in Yahoo Shopping, forget it. If I get a hundred hits in 20 to 40 stores, I`ll look into it further.
So check out the competition, narrow down your product list, make a note of the five lowest prices you find, and then ask yourself another question.
Is anybody going to buy this thing?
This doesn`t have much to do with pricing, but it should be said.
When considering products, there`s unique, and then there`s too unique. Yak Cheese may sound like something that nobody else has for sale on the `Net. There`s a reason for that. If you sell more than 3 boxes a year, I`ll EAT some.
Unique is Rain Barrels made in Maine. It`s Exotic Cheeses imported from Italy. Silk Parisian Lingerie. Things you don`t see every day, but would be proud to give as a gift.
Then there`s "common". Everybody and their grandmothers are selling Alabaster Figurines on the Internet. Do they sell? Sure, in a limited fashion. Do you want to sell them? Not if you want to make any real money.
In my experience, unique products, like Rain Barrels and Parisian Lingerie, DO sell. So do Coleman Sleeping Bags, and Conair Hair Dryers. BRAND NAMES sell. Look at your potential product, and ask yourself honestly if YOU would buy it on the `Net.
Set your price
Take the five lowest prices you collected on a product in your list that has survived the above. Calculate your estimated cost, then subtract that from the lowest price. If you don`t see at LEAST 15% profit, don`t bother.
If you do, there are a couple of ways to proceed. You can undercut the lowest price in your "venue" by a bit, and hope to "kick off" the product and get yourself noticed. Chances are, though, that the following week you`ll find that someone has undercut YOUR price by just a bit. That becomes a losing game.
I generally set up a couple of "loss leaders". These are desirable items (in my general product line) that I sell dirt cheap just to bring in customers. Then I price the rest of my products at the second or third lowest price in my venue. The customers come in for the loss leaders, and then I can market everything else to them via email. I spend a lot of time making my site look better and easier to navigate, and pay a great deal of attention to my customers.
That makes me more reputable in the eyes of the customer. You`ll find that people don`t mind paying just a little more if they feel comfortable in your store. They don`t like to worry that they`re buying from a "hack" who may not deliver. Nothing says "hack" like a cluttered, confusing storefront.
Follow up
After you`ve sold an item for a month or two, revise that "cost of goods sold". Measuring past performance is just as important as setting the correct price to begin with. If sales drop, recheck your competition. If that`s not it, drop the product, or shelve it until the "season" comes back around. Don`t get sentimental about your products, and NEVER just let your store sit there in limbo once it starts to make money. This is a dynamic business; stay on top of it!
A last word (or three)
Retail pricing on the Internet is so fraught with permutations that it would be impossible to cover everything here, even if I KNEW everything. The steps above are just the basics of a process that works for me. Hopefully something here will strike a chord and work for you as well. Patience and persistence are the keys to a successful Internet business, so hang in there, and don`t quit the day job for at least a couple of weeks. ;o)
I hope this helps in your future marketing decisions.
