After releasing a product on a trading platform, you will face pricing issues. Some may say, isn’t pricing easy? In fact, pricing is far from being as simple as it sounds. In fact, there are still many sellers who don’t know how to set prices. On the AliExpress platform, sales volume and keywords are the key factors that affect product ranking, and the key factor that affects sales volume is price. Before we delve into the important factor of price, let us first understand the following terms.
★Listing price: refers to the price filled in by the seller when uploading the product.
★Sales price: It is the price after discount that people often say, and the calculation method is the listing price Multiply the discount.
★Transaction price: refers to the final price paid by consumers, calculated as the sales price minus various marketing discounts.
After understanding the relationship between the above three prices, we can implement different pricing strategies for products with different positioning.
◆Madman Strategy
The Madman Strategy requires sellers to have an in-depth understanding of the market conditions of the industry and a sufficient understanding of the sales prices of sellers in the same industry and their own products of the same quality. Use this to determine the lowest price in the industry, and then subtract 5% to 15% from this price. The resulting price is the sales price of the product. The listing price and transaction price can be determined based on the sales price. Generally speaking, there are two ideas for determining the listing price:
★The first idea is to divide the sales price by 85%. The cost of this strategy is relatively high, it can be used for hot sales, it is simple and effective, but the risk is relatively high and it cannot be used continuously.
★The second idea is to divide the sales price by 70%. This idea is more conservative. If you want to restore the sales price to a normal level later, you can adjust the discount.
Both of these ideas can achieve a flat sale or a slight loss at a 15% discount, and can be used to attract popular products.
◆Prudent strategy
The prudent strategy is more prudent. First do the cost calculation for the product, and then determine the sales price based on this. After determination, the shelf price will be determined based on the store’s overall marketing strategy.
For example, if the cost of the product is US$3, the platform’s average gross profit margin is 5% and the commission rate is 5%. In addition, some orders will generate 3%~5% alliances. cost, then the sales price of the product can be calculated.
First divide $3 by 90% minus commission fees and affiliate fees, then divide by 85% minus gross profit, and then arrive at the sales price of $3.92; a conservative calculation In this case, divide $3 by 75% minus the above three expenses to get the sales price of $4.
Among them, not all orders can generate alliance fees, but some marketing investment costs must be taken into account, so 5% of the alliance fee can also be regarded as 5% of marketing expenses.
In addition, losses such as lost goods and transaction disputes must also be taken into account. If calculated based on a packet loss rate of 1%, the calculation is as follows:
Divide by 3 US dollars and subtract 89% of commission fees, affiliate fees and packet loss rate, and then divided by minus 85% of gross profit, we get a sales price of $3.96: To be more conservative, divide $3 by minus the above 4 percentages 74%, resulting in a sales price of $4.05.
After determining the sales price, you must also consider how the product will be sold, whether it will be an event or a general model.
If it is used as an event item, it must be calculated according to the 40% event discount stipulated by the platform. Then the listing price is equal to the sales price divided by 60% minus the discount, and the highest event discount can reach 50 %, which was the sales price divided by 50%.
If it is a general model, it needs to be calculated according to the usual 30% discount, then it should be the sales price divided by 70% minus the discount.
Generally speaking, the discount number required by the platform when conducting large promotions is greater than or equal to 15% and less than 50%. If the discount is too large, it will be suspected of being a false discount. According to official statistics, discounts of around 30% are most popular among consumers.
Based on this strategy, during the 50% discount event, the seller will not lose money or only slightly lose money. If the number of consumers buying at one time increases, a certain amount of profit can be generated.