Pricing is a science. It is not that there is no problem if the product is sold at a price higher than the cost price. A high price means a high profit, but the number of buyers may decrease; a low price means a low profit, but the number of buyers may increase. So how to maximize the total profit is the question that needs to be considered when pricing. When pricing products, sellers will consider many aspects, and there are four basic factors that need to be considered.
(1) Store product positioning
To reasonably price store products, you must first have a clear positioning of the store’s products. Store product positioning needs to start from the characteristics of the product itself and study clearly what advantages the store’s products have that are worth buying. Store products can generally be positioned from four aspects: low price advantage, professional advantage, characteristic advantage and added value advantage.
Product positioning first considers whether the product is attractive to buyers in terms of price, and whether it needs to rely on low prices to ensure sales and thus maintain the operation of the store. Some online stores have outstanding professional advantages. If the products of online stores have certain characteristic advantages, they can also set prices higher than similar non-characteristic products. Some stores do not have professional advantages or special advantages, but the quality of their products is first-class and they have been operating for many years. These added values can add points to the products of the store, so that they can set slightly higher prices for some of their products.
(2) Consumer groups
Mature stores also have a fixed consumer group. If the seller’s product price is higher than the consumption capacity of the fixed consumer group, these consumers cannot afford it; if the seller’s product price is lower than the consumption capacity of the fixed consumer group, these consumers will think that the product is so cheap and may have quality problems, and will not buy it.
To determine the consumption capacity of the store’s consumer group, the seller must first look at the age and occupation of this group. The seller can find the age of the group from the customer’s information statistics, and roughly infer the occupation and consumption capacity of the group from the customer’s consumption records and delivery addresses. After determining the consumption capacity of the consumer group, the approximate price of the product can be determined. Whether it is domestic or foreign, the consumer group can be roughly divided into three categories, namely teenagers, middle-aged and elderly.
(3) The significance of product sales
Managing and operating online stores requires flexibility and strategy. Therefore, when sellers set prices for goods, they must consider the sales significance of the goods for the overall interests of the online store. The so-called sales significance refers to the role of selling this product for the online store.
Under normal circumstances, the goods of online stores can be divided into three types according to their sales significance: traffic-generating goods, positioning goods, and profit goods. Traffic-generating goods, as the name suggests, are goods that bring traffic to the store. Such goods usually attract buyers to the store at a low price. Traffic-generating goods account for 10%: the role of positioning goods is to control the positioning of the store within a range, so that the store will not gradually lose its brand value due to too many discounted low-priced goods. The pricing of such goods is relatively high, and positioning goods account for 20%; the role of profit goods is to make profits for the store. The pricing of such goods is between traffic-generating goods and positioning goods, and profit goods account for 70%.
(4) Competitors’ Prices
Whether domestic or foreign consumers, they all have the mentality of shopping around. In order to cater to this mentality of consumers, sellers should refer to the prices of competing products when pricing their products. After sufficient comparison and research, they should set the prices of their own products. This way, they will not be at a disadvantage in the fierce competition.
Sellers should never think that the lower the price of a product, the more popular it will be with buyers. At the same time, they should also be aware that not all similar products are their competitors. Sellers need to understand the brand value of their products and the price range preferred by buyers of different products, and then accurately find competitors and finally determine the price of the product.