WHAT IS YOUR CUSTOMER WILLING TO PAY FOR YOUR PRODUCT?
When doing research for my clients around pricing, I ask the following questions:
- Where is your brand and product positioned in the market?
- Do you know if your product is priced too high or too low?
- What is the customer willing to pay for your product?
- What kind of customer do you want to target?
- Do you know your costs for producing or buying and importing, or even drop shipping your product?
- Do you monitor your competitor's prices?
It's interesting to hear how many have done research on pricing when they first started. Now it's been 6 months, one year or even longer and their prices have stayed at the same price. While online consumer behavior changes, importing custom taxes may have increased, shipping prices have changed, new competitors may have entered the market, but your price has stayed the same.
Here are some third party tools I use to know what I should be charging for my product:
A free tool by Ebay, displaying some helpful data. Select 'What's it Worth'. Find your product by searching keywords and get the average price sold in the past 3 months. Being free it comes with some limitations. I would like to know how many similar products have been listed on Ebay.com, how many actually sold, and what was the average shipping price.
Terapeak is not a free tool, but worth it if you are constantly looking for trends or breakdowns on understanding the chances of your product having a successful sell through on ebay. Terapeak provides details on the top sellers and direct figures like average prices, sales totals, number sold, typical shipping costs, and top sales regions. You're able to study detailed breakdowns showing when products sold and where, as well as which strategies were used to get shoppers to buy paid vs normal listings on ebay. TeraPeak also provides further data on hot items being sold on Ebay.
The best way to understand if you have priced your product correctly in the market is by generating data on your own site. An easy solution for this the A/B Split test app. Available on the Shopify App store.
With the Shopify A/B Split Test app you can see which product image, title, and description sells more. And, it's all done within Shopify!
See how your split test is performing with an easy to read graph that measures the difference in product views, how many times your product is added to cart, how many purchases are made, and what your sales conversion % is for each test.
Feed back we've received from users using A/B Split Test for Shopify:
Store A (Jewellery)
They tested the difference between their regular price of $390 and $499, their newer much higher price.
After 48 hours the app user was able to see a distinct winner with their original price making only one sale, whereas their newer higher price had made SEVEN sales.
Store B (Kitchen Utensils)
This user tested their regular price of $6.95 against a slightly higher price of $7.95.
The app user's website gets a lot of traffic so over a couple of days of testing, the product had sold over 60 times. The price difference between version A and B was just a dollar. The app user found that both prices were converting virtually equally.
In summary, the two versions of price converted the same but one was selling for 15% more. After picking Version B ($7.95) as the winner, the user is now looking to start a new split test with testing a slightly higher price of $8.95.