Pricing Your Products

In our scramble to find a way to offer the lowest prices on the Internet, we often overlook the basic steps that we should be taking BEFORE we even offer a product for sale.

We also overlook something even more important: you don’t HAVE to have the lowest price in order to make great sales. Following are some things I do before and after determining my bottom line. I sell by having products drop-shipped for my sites, which works VERY well, but these steps should be covered no matter your distribution method.

Should you be selling this item now?

Snowboards don’t sell well in the summertime. You may have a hard time moving a pair of roller blades in January. Don’t waste your time and your site space marketing products out of season. Ask your supplier for a little historical information regarding the best time to sell their products. Believe me, to everything, there IS a season. They have the figures. If they don’t want to share this info with you, find another supplier.

Identify your costs

Profit isn’t just the difference between wholesale and retail. You have other costs to consider. Think about every penny you spend in order to get that product to the customer’s door, and plan accordingly. For example, your merchant account probably costs you about 2.2% plus 30 cents per transaction. On an item you’ll sell for $20, that’s 74 cents. Don’t forget that calculation when pricing the item. Are you warehousing the item? How much is that space costing you per item per month? Did you spend money stocking up on shipping materials? How much per unit? What about advertising? Monthly hosting costs? You may need to project some estimated sales in order to arrive at some of these figures.

This may seem very complicated, but it’s really not. Just take the figures one at a time, and you’ll arrive at a wholesale cost plus an amount that, when added together, becomes your initial ESTIMATE of “cost of goods sold”. Identifying all your costs is critical if you want to price your products properly.

Check out the competition

Search on the item you plan to sell. Check out the competitors’ prices. But DON’T get caught up trying to beat the wrong competitor. You need to stay within your “venue”.

My stores are built in Yahoo Shopping (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.

The Definition of Productivity

People commonly understand productivity as a variety of things in a variety of fields. In a business that has closest relations to it, productivity is understood in various ways according to which aspect is studied. (According to the newest report, there are about twenty business-related definitions of productivity!)

The Concepts of Productivity

Most of the concepts have a relation to productivity between input and output to the systems studied. Productivity contains variables as well as other inter-relations within the group to which it belong(machinery systems, factory, office etc).

Also it is considered as the stimulus-response model in which inputs cause outputs. Generally, for the purposes of simplicity, we can understand it as the output divided by the input. But there is still something confusing on the point of this view.

In most fields, productivity is understood as “clearly the relationship between the resources which come to an organization system for a specified time period and the outputs which are generated with the resources generated for the same time period”.

The Variables of Productivity

In factories, for instance, productivity measures which are related to input factors (capital, labor, etc) are insufficient and at times could be misleading.

Input factors may not be studied while being isolated by themselves. Generally productivity improvement in a field is at the expense of the others. In addition, labor as a factor of input may be present in all stages. Moreover, management resources (another necessary factor of input) is not considered in these measures.

But the remaining of these concepts consider productivity as the relationship of input and output related to a system of production. This means that there are organizations working as physical systems with many variables as well as other inter-relations within.

The Objectives of Productivity

Experts Vrat and Sardina said that the people who will carry out measurements of productivity must have three objectives.

Firstly, potential improvements should be identified. Secondly, decisions should be made for reallocating resources. And lastly, it must present how the pre-set goals were determined.

Financial and Performance Productivity

There are some differences between two factors. Based the number of outputs produced, we can calculate performance productivity.

For instance: Company A produces 200 product units in a week, and the next week they are able to reach 220 units. That means the performance productivity has increased by 10%.

In comparison to performance productivity, financial productivity can be grouped by the value of output. Suppose Company X produces 200 product units in the one week as well as the next. And the selling price have raised from 1.00 dollar to 1.10 dollars per unit. Financial productivity has increased by 10%, however there is no increase in performance productivity.

This is sometimes misleading, too. In case the company sells products in 220 item at 1.10 dollars each, and the next week the price has fallen by 9.1%, the sale is still 220 dollars.

From a standpoint of finance, there is not any change even if there are some changes of performance point. (They produce extra 20 items)

So What the Definition of Productivity is?

Until now, managers are not able to determine what the measurements, improvements and definition of productivity. They also cannot define the measurement, improvement, concepts of performance as well.

How to Ensure Your Work From Home Ideas Business is Legitimate

1. Do not start any work from home program until you have a personal referral. If you know somebody who is working a program and getting paid like they are supposed to that’s a good sign the program is legitimate.

This is where social networking really comes into play. You can meet people on the Internet and get to know them and trust them as friends. If they are doing something that is making them money they’re going to naturally tell you about it.

This is a vital source of work from home ideas that are often times legitimate. Many times even if you are not looking for something new you may join them just because of their recommendation.

2. Look for ideas that have longevity to them. For example we know that affiliate marketing is a legitimate business model.

However there are new affiliate programs popping up every day. How do you know which ones you can trust?

A good place to start is with some of the largest affiliate programs that have been around for a while. For example selling digital information products from Clickbank is a legitimate way to make a lot of money.

Amazon.com is credited with starting one of the first affiliate programs online. It has now been around for over 15 years and is certainly a legitimate way to make money working from home.

Is interesting how many of the largest companies in the world have affiliate programs now. Did you know you can even join an affiliate program with Wal-Mart? This certainly is a legitimate opportunity!

3. Starting a blog with Google is a work from home idea that many people begin with. Google owns Blogger.com and is a fast way to get your blog online.

They also offer an affiliate program known as Google AdSense which pays out millions of dollars in commissions every year. You will find this an easy way to make money every day and blogging can be a lot of fun if your topic is something that interests you.

These are several ideas on how to ensure your work from home ideas are legitimate. Personal referrals, programs with longevity, and going with brand names are all a safe bet on the Internet today.

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