How do you do your pricing?

Poster
Message
Herts, England United Kingdom
Andy
Kudos: 11,619
Joined: Jan 1, 2001
How do you do your pricing?
3 Jul 2015
Our blog post on pricing by James Thomson included some great advice... such as factoring in all your costs, and assessing profitability down to the SKU level.

But what's the reality of how you price your products?

Do you have the processes and software to select the best pricing strategy for each and every SKU? Or do you always price based on cost plus a fixed margin? Or let a repricer handle it all?

Would love to hear what you do, and about any challenges you face when you set prices.
Andy Geldman, Web Retailer
Please follow on Twitter, Facebook, LinkedIn or Google+
Sheffield United Kingdom
John Mounsey
Kudos: 86
Joined: Apr 10, 2015
Re: How do you do your pricing?
3 Jul 2015
Obviously my approach won't be at all suitable for larger-scale sellers... but it's MANUAL all the way for me.

A number of reasons - but many of my products are very niche - with me quite often finding myself in the privileged position of being the ONLY seller of a given line. That doesn't mean I can always "Name my Price" though - as the items in question WILL be most likely available elsewhere - so I have to keep an eye on things.

Also, the fixed margin model would mean I personally would be missing a trick - as some products I sell have the capacity to bring in a LOT more profit (proportionally) than others...

Naturally I don't think I could sustain this model / approach if I had more than the couple of hundred lines I typically offer at any given time (many of which seldom need price changes - if at all).

John.
United States United States
tall-corn
Kudos: 108
Joined: Dec 13, 2012
Re: How do you do your pricing?
3 Jul 2015
A lot of my items are Minimum Advertised Price (MAP) so I use that, or higher. Profit per item depends on risk of return or damage in shipping and cost to obtain including ship to me costs, Prep costs including labor, packaging, shipping and Amazon/ebay fees. I like to make a minimum profit of $10 per sale, I set a target price of $25 per sale. I might go down to $5 profit on quick fast selling easy items. If I cant meet my minimum in a reasonable amount of time.I drop the price, and don't re-buy, or I figure a new way to sell that gives me the desired profit.

www.vmtw.com
United States United States
lordsoftheflycollegeplace
Kudos: 30
Joined: Mar 12, 2015
Re: How do you do your pricing?
7 Jul 2015
In an attempt to depart from hackneyed dependence on prices ending in 99¢ (e.g., $9.99, $24.99, or $63.99) I have resorted to using key calendar dates--birthdays, graduation year, age a loved one or I happened to be at on any given year, street address, etc.--for my prices. For example, I sell books. A set that I assess to be just over a hundred dollars would bear a sales price based on the birth date of one of my children--10/8/86, as in $108.86. Psychologically, I truly believe that prices not ending in 99¢ catch the subconscious attention of potential buyers. Does it work? Well, I've made a lot of sales for items priced at $28.22 or $22.28, with the respective pairs on either side of the decimal point representing the present ages of my adult children.

Some might say it's all just coincidental. I happen to think otherwise and was bold enough to post this response to the pricing inquiry.

Aloha!

Joe
Lords of the Fly

[Last edited: 7 Jul 2015]
Sheffield United Kingdom
John Mounsey
Kudos: 86
Joined: Apr 10, 2015
Re: How do you do your pricing?
7 Jul 2015
I like this approach, Joe! Great idea. One I've used _occasionally_ myself too - but your post has reminded me to perhaps use it more often.

John

lordsoftheflycollegeplace wrote:

In an attempt to depart from hackneyed dependence on prices ending in 99¢ (e.g., $9.99, $24.99, or $63.99) I have resorted to using key calendar dates--birthdays, graduation year, age a loved one or I happened to be at on any given year, street address, etc.--for my prices. For example, I sell books. A set that I assess to be just over a hundred dollars would bear a sales price based on the birth date of one of my children--10/8/86, as in $108.86. Psychologically, I truly believe that prices not ending in 99¢ catch the subconscious attention of potential buyers. Does it work? Well, I've made a lot of sales for items priced at $28.22 or $22.28, with the respective pairs on either side of the decimal point representing the present ages of my adult children.

Some might say it's all just coincidental. I happen to think otherwise and was bold enough to post this response to the pricing inquiry.

Aloha!

Joe
Lords of the Fly
Supplier
San Francisco, CA United States
Wiser
Kudos: 35
Joined: Jan 27, 2014
Re: How do you do your pricing?
7 Jul 2015
The easiest way for Amazon sellers to price their products is by repricing their products in real time. Most sellers have to deal with Amazon as a direct competitor, and Amazon is a ruthless seller who is known to change its products' prices every 15 minutes. Offering a fixed price is a useful strategy, but only if you have very little inventory overlap with competitors.

The fixed price tag is becoming increasingly obsolete as more retailers adopt a dynamic pricing strategy, especially on Amazon. Repricers are the easiest way to compete, but investing in a repricer is really only beneficial to sellers who make a certain threshold in revenue. For Wiser (my company), the minimum revenue we look for in prospects is $2 million. So the real answer is: it depends on what you're selling, and what the size of your business is.

We put together a blog post highlighting different ways sellers can reprice, feel free to check it out here

[Last edited: 7 Jul 2015]

Ad-Lister
Xpress Lister
2nd Office
ChannelAdvisor