When you set your pricing, do you charge a high price? This topic is touchy for many of you. You do not talk about it, but you are thinking about it. You may call it the huge “elephant” in the room, which no one wants to discuss. Do you drive customers away from pricing too high? The cost of an item is at the forefront of your mind when you go shopping. No one wants to overpay for anything.
How do you set your prices?
Pay attention to the market in which you are selling. Look at what your competitors are charging for similar products or services.
· Customer’s needs
Part of pricing involves knowing who your clients are. Are you selling items for young people, middle-aged, or seniors? What is their socioeconomic status, are they wealthy, working class, or students? People who have money to splurge may pay a higher price than others on a smaller budget.
Sometimes you have items in high demand you sell in large volumes. Pricing those items too high will not guarantee you a profit. For example, you will make more money selling a product at a lower price than at a higher rate. A pack of socks sold for $5 would sell more than a package priced at $10 despite the high volume. Anything higher than the low-end rate is a high price.
The material you use will affect how you price an item. For example, are you using 100 percent cotton or cotton blends to make your T-shirts? If you use blended materials, the pricing has to be lower because of the quality of the content. Your customers will pay a higher price for better quality products and not a cheaper value.
Is your design handmade? Did it take a long time to prepare? You can get over on pricing your products much higher if you have an intricate design. People who buy a particular model are expecting a better quality product and will pay more for the design. Setting a high price for a simple design is too much and will not sell well.
· Use pricing scale
When setting prices, go from low, average to high. Price them based on the features and designs they have.
What drives pricing: Are you charging a high price?
How do you decide what customers will pay? Are your customers paying a high price for your products?
· Demand for goods
Figuring out pricing depends on the demand for your goods or services. Here is how to know if your products or services are in high need. Do a market survey and throw in a few samples. Ask about 20 people to sample your products. Have a list of different prices available for your products.
Then, ask each person to choose from the list how much she or he would pay for it. If your samples are in high demand, you will have a better idea how much to charge. Your pricing has to cover the cost of making the items, or else you will not make a profit. If your products are of excellent quality, people will pay you more for it.
· Charging for shipping
Research studies show over 50 percent of online shoppers complain about high shipping costs when shopping. The same research shows over 60 percent of consumers cancel their orders because they are paying a high price for shipping. If you are hoping to profit off shipping fees, you may end up losing a few customers.
You do not want to charge too little for shipping either, meaning what you charge should cover handling and transportation. But, make sure the pricing is not too expensive and beneficial to both parties. Amazon is winning in the shipping cost department. They have millions of satisfied customers because of low shipping fees.
Tips on handling shipping charges
According to a Forbes Magazine article, you have a few choices on how to figure out your shipping rates.
Calculate your shipping costs
You can do the calculations by measuring the size and weight of your products. Get an exact cost on how much to ship them. Round up your results to the nearest whole number. For example, if a package rate is $5.40, the amount you should charge is $6.00. This method is a fair way to price shipping.
Flat-rate shipping works well for small and light items. Also, flat-rate is a way to keep shipping fees less complicated for your clients. When applying this method, use the average costs of your overall shipping.
Pay close attention to this choice because it may change. For example, if your average costs increases, raise the shipping rate. If costs go down, lower your shipping rate. So, always pay attention to the cost of shipping when using this method.
Shipping as a profit source
Shipping charges is another way to increase your profit, but the trick is not to go overboard. Add a reasonable amount to your shipping charges when going this route. Ask yourself this question, “Would I pay this much in shipping fees if I were to buy this product?” It will give you an idea how your customers will respond.
Is free shipping a choice?
People like to get free things. Figure out a way to add the cost of shipping to the value of your products. Plus, the checking out process is more natural for customers. The choice is yours. Do what is best for your business.
Does high pricing drive customers away?
When selling your products, pricing should not be the focal point. If you insist on charging a high fee, someone else down the road might steal your customers with lower rates. Your clients respond well to their budgets. If they do not have enough money to buy your goods, they will shop elsewhere.
Studies show, your primary goal should be the value of your goods. Use your time to increase the worth of your products. For example, when people use your merchandise, how does it make them feel? Does it cure an illness? Does it make them joyful? These are things people value when they buy an item. If your products improve your customer’s lives, they will pay a higher price for your goods.
Pricing is tricky if you do not follow the basic principles. Study the market you serve and your competitors. Market research to gauge your customer’s needs and see what the demand is for your products. When adding shipping charges try to avoid overcharging. Your clients are “research” savvy; they can tell when you are charging a high price for shipping.
What are your thoughts on high pricing? Please feel free to leave a comment.