It is very important for merchants who open stores on Lazada to seriously consider the pricing of their products. Pricing too high will reduce the competitiveness of the product, while pricing too low will cause merchants to sell at a loss and make the market lose confidence. Next, we will discuss the product pricing strategy of the Lazada platform.
1. Lazada pricing formula
Lazada product price = product cost + commission + shipping + tariff + other fees + expected profit
1. Product cost:
Includes the manufacturing cost and transportation cost of a single product, as well as the allocation of various expenses (such as mold opening fees, certification fees, development costs, etc.). It should be noted that product cost is not equal to procurement cost.
2. Commission:
The commission is the fee charged by the Lazada platform to sellers. The tax rate is between 1% and 4% according to the regulations of different regions, and the tax rate in Vietnam may be as high as 8%.
3. Shipping costs:
For Lazada sellers, the shipping costs are divided into three stages: domestic shipping costs incurred by sellers to the sorting center in Shenzhen or Yiwu, international shipping costs from the sorting center to the destination country, and local delivery costs after arriving at the destination country. Therefore, after the buyer places an order, there will be three stages of domestic, international and local shipping costs, of which domestic and international shipping costs are borne by the seller, and local shipping costs are borne by the buyer.
4. Other costs:
Including fees such as value-added tax (VAT) charged by the receiving country/region.
5. Expected profit:
The unit profit that the seller expects to obtain on each product.
In the process of product pricing, in addition to comprehensively considering the above various influencing factors, sellers can also refer to the pricing range of similar products, understand the shipping locations of other sellers, and obtain specific information about the product from the product details page, all of which can be used as reference standards for pricing.
2. Lazada Pricing Skills
1. Refer to market prices and competitors:
When launching new products, if the product price has a competitive advantage, there is a chance to obtain platform traffic tilt and attract more buyers to consume and place orders. Therefore, it is necessary to refer to competitors’ pricing and related factors when setting prices.
2. Reserve enough discount space:
This includes the price reduction ratio between the selling price and the promotional price, and the price reduction ratio between the strike-through price and the selling price. This price reduction method can effectively enhance the strength and effect of the price reduction. Sellers can display such a price form on the promotion page or the main picture of the product to increase consumers’ desire to buy. However, it should be noted that product price reduction will affect profits, so when pricing, the price reduction space of the product should be considered in advance.
3. Use pricing tables cleverly:
For those sellers who put a lot of products on the shelves every day, you can use the pricing table tool to formulate a pricing template based on the rate table and formula.
After the above introduction, we understand the product pricing strategy of the Lazada platform and how to price. Merchants can set prices according to the above methods. Only appropriate prices can promote the development of the store.