Determining how to price your products is one of the trickiest parts of selling online, but it gets even more difficult with homemade items. The primary cost to consider (aside from materials) is your time, and nailing down that value is particularly tough for a small business. Exclusive products give you the ability to set any price you want, but it's important to consider what customers are willing to pay and what competitors charge for similar items.
An effective pricing strategy comes down to the type of items you make and sell. Here are some factors to assess to establish prices:
The pricing strategy you set when you first set up an online store likely won't be as relevant after you have been selling items for a few years. The market doesn't remain stationary for long. Have more competitors entered the market since you started selling items? Have you added more items? Major ecommerce providers such as Amazon change prices every 15 minutes, but this is more difficult for smaller online stores. Price optimization software is more available and enables retailers to capitalize on opportunities if their competitors run out of stock.
Value is an important consideration for pricing. For example, handmade jewelry items often involve precious metals, stones and require a long time to make. However, the way your items are branded and promoted makes a big difference in the perceived value. Logos, presentation, photos and even the tone of your website impact how potential customers view your brand. An appealing style and brand make customers more likely to purchase from your store. While price factors into consumers' decisions, retailers need to be wary of undercutting all competitors on cost because it can impact the perception of the brand.
Another way to avoid sticker shock is to rank your products from most to least expensive. When consumers have comparisons right in front of them, they are less likely to view something as too expensive. It's important to optimise products on your website because too many choices is often overwhelming.