There is plenty written on Internet businesses. Topics covered range from how to write ad copy, formulating pay per click ads, and writing emails. But there has been little written on the topic of setting prices online.
Setting the right price online can mean the difference between a 1% and 5% sales conversion ratio. In other words, by having the right pricing you can sell to as many as five times the amount of customers that you could otherwise.
The reason pricing is so important is because people respond differently to different numbers. For instance, by pricing an item at .99 instead of $1, the illusion is given that the item is cheaper. This approach is used by high priced item sellers when they sell a car for $19,999 instead of $20,000.
Price your items similarly and you will see less hesitancy on your customer’s part when you sell high priced items.
You should also price your items so the last digits are the same. Look at the difference between the following two prices:
$199.99
$199.93
Most people will focus more on the second price, and even though it is lower, they will hesitate since the number has caught their attention.
When setting prices you might be tempted to simply offer a low price and hope for the best. This strategy is far from effective. If your products are priced too low people will assume that your products are of inferior quality.
You need to charge a decent price, and sometimes even a high price, in order to increase your sales. Support your pricing by explaining to your customers why they are paying more for your merchandise.
I sell brand name clothing to retailers for as much as $25 a unit. My price might seem high, but once retailers see that they are purchasing a $300 jacket for less than 10% of retail they are glad to pay for it.
My wholesale business, www.closeoutexplosion.com needs to supply resellers who in turn need to make a profit on the merchandise they are selling. I have shown my customers that they can succeed by focusing on higher priced merchandise, and expensive products, as long as they communicate the value of the products to their customers.
All of these strategies work on eBay too.
When you list an auction on eBay use a starting price that will call attention to your auction. A price too low and eBay shoppers will assume that your item is inferior.
I have seen the other extreme take place on eBay.
When an eBay auction has a very high starting price the auction attracts allot of attention.
eBay shoppers assume that the item being auctioned is of very high value, otherwise why would the starting price be so high?
Remember that pricing is only one ingredient in the success of your online business. Your actual long term online success is dependent on the quality of the products and services that you offer.
Donny Lowy runs http://www.closeoutexplosion.com an online wholesale and closeout business.
