On top of that add your profit margin. "Partial Shipping Fee? What's that?" Good question. For this scenario, I'm going to explain it as though you decided to run a Yahoo! Store. When a customer orders from your store and checks out, a shipping charge is calculated and added on for the final total. That shipping charge is usually based on a table you create. Like add $2 shipping on order that total is less than $10, add $4 shipping to orders that total greater than $10 but less than $15, and so on and so forth. But that table will not cover every occurrence. There will be a number of times when the table will calculate a shipping cost less than the actual shipping cost. So at one point I starting pricing the products with a shipping buffer to cover this discrepancy. This will also present you opportunities to be super nice, because sometimes the table will calculate shipping costs higher than the actual cost. When that happened, I liked to send the customer an email telling them I found a way to save a few dollars on their order. I may have lost a few dollars profit, but I gained a repeat customer. As far as pricing the buffer, I tried to keep it around 75¢ a product, but never went over $1. But if you are selling items like billiard tables, that is a special case you will need to tackle. Your distributor will have advice on handling issues like that. Reality check: the above information is the best place to start when pricing your products, but throughout running your business they will undoubtedly change due to demand, supply and competition. There will be times when you will need to shrink your profit margin on a product to stay in the game, that's just how it is. I'd like to tell you a story of mine regarding product pricing. I had a Yahoo! Store selling products with very little competition. There were only two other stores selling similar products. I priced my products just below what the two competitors had theirs set at, and I imagined the customers flocking to me because I could save them money. But my sales lagged! They were only trickling in, and those were mostly from regular customers who had gained trust in my store. I went to my competitors site's to see what was going on, and indeed, they still had higher prices! Then I noticed it. I saw a banner saying "We will beat anyone's prices!" Customers were going to them saying they saw the same product priced cheaper elsewhere and asked them to beat it, which they did. I then raised my prices to match my competitors and my sales skyrocketed! So keep in mind, cheaper prices does not automatically equal more sales. Since I couldn't beat my competitors through price, I had to beat them through site quality and product incentives. I added a section with tips and advice. I made it so customers could ask me a question and I would post the answer for all to see. I didn't always have the answers to the questions, but I had various distributors and a vast resource called the "internet" which did have the answers. With this section, I made myself the undisputed "expert", and customers will by from an expert faster than just some schmoe running a store. I also added product incentives. Like, free shipping on orders over $100, a free smaller item on orders over $25, a free sticker with certain items, a free shot-glass with other items. With fine tuning and tracking, my sales rose even more. Yes, some incentives will cut into your profit margin a little, but the profit you make with 5 sales instead of 3 is greater than the lost margin. But most importantly, if you are running a respectable business and care for your customers, they will stick with you. And building a customer base is an important part in your success. (Duh...) Now, all of that was if you were selling tangible products. But what if you are selling information products? If you bought resale rights for it, often a minimum price is part of the reseller guidelines. If you are creating the product yourself, then you've got a lot of research to do. Look around and see how much your competition is selling their item for, and what is included in their package. Remember that cheaper does not equal better. When it comes to information products, if the price is very low, that most likely means the product quality is low. Whether or not that is true, that's how consumer minds work. If you price the product too high, then you will be losing customers who would like to buy, but can't afford it. A way to test your price is have 2 web pages advertising your product and ONLY change the price on one of them. Aside from the price, they should be exactly the same. Market them equally and see which one sells better. There is a product called Make Your Price Sell. It is a polling tool that gathers the exact information you need to the most popular and most profitable price for a particular product. Click here to check it out and see if it'll work for you. | | |||||