If you’ve been selling on eBay for any amount of time, you probably have a pricing strategy in place. But, if you’ve been using the same strategy since the beginning, it may be time to revisit and optimize your plan, particularly when it comes to pricing.
Offering deals can help you manage natural peaks and valleys throughout the year, aid in clearing out older inventory to make room for new, and bring you more sales in a shorter period of time. Setting up sales on popular items also invites new buyers to your store to check out the rest of your stock, which can lead to a bump in sales of your other items.
However, there’s an art and science to playing with the dials of pricing to attract buyers looking for a deal. Here, we break down the path to craft a pricing strategy that works for your individual needs.
A pricing strategy starts with knowing your numbers.
As a seller, you know your cost of shipping, your margins, cost of returns and other expenses, which means you know exactly how low you can go while still turning a profit.
You should keep this number in mind for every item you sell because it will influence whether or not you should consider that item for discounted pricing, and how much of a discount you can offer.
Items to consider discounting.
Discounting a rare, one-of-a-kind item that’s in high demand just doesn’t make sense. When thinking about your pricing strategy, think about the items that a brick-and-mortar retailer might use as aisle end-caps or doorbuster deals; these are ideal items to consider.
These items could be:
The discount offered can range.
You know how much of a discount you can afford to offer, and the good news is that it can be a relatively small percentage off of the competitive market price. As little as 8-10% off of the market price can be seen as a deal, and you can offer these smaller discounts more often while saving larger discounts of 15-20% off for big retail moments like Black Friday, or times when you really want to make a splash and move inventory quickly.
The first step is to figure out what the item’s average market price or everyday low price is, which you can find in the Growth tab on Seller Hub. If you want to price your item just a little bit below market rate, consider 8-10% off. Consider deeper discounts if you are trying to dramatically increase sales velocity—for example, if you need to clear out aging inventory or make room for new goods in a short period of time. The relationship between price and demand tends not to be linear, so walking down your price can sometimes result in surprising sales growth.
For example, if your item’s everyday price is $24.99:
Offered at 8% off = $22.99
Offered at 12% off = $21.99
Offered at 20% off = $19.99
Work backward from the lowest price you’re comfortable offering to come up with your maximum discount as well as a lesser discount amount that will be enticing to customers without cutting too much into your profit.
Easing into a new pricing strategy.
Now that you know the maximum discount you can offer and still make a worthwhile profit, you can start small.
First, think about your products in two groups. The first group—the group you won’t be discounting—contains your core products. These are your bread and butter, the items you sell a few (or more) of every day.
Group two, however, might be the items as described above. They’re commonly sold items you have a lot of, and which you can afford to reduce in price without taking a loss. These are the items to consider testing out your new deals strategy.
Next, think about timing. Maybe you have a few days in mind each month or quarter when you know you want to clear our inventory or entice new buyers into the store to meet a sales goal. Or maybe you know your products align with a specific retail moment, such as back to school or summer.
Choose a few days to start offering your discounts, and start small. You can begin by offering a discount on the lower end of the range and increase as needed to sell your items more quickly.
For example, say you have an item that sells at $24.99 every day with a few sales per day. Each quarter, you know you need a bit of help getting to a specific goal, and this item could help move that needle. You could drop the price 8-12% for a few days during special periods like three-day weekends or on certain retail-related holidays.
Experiment a bit with your discount until you find the sweet spot: the price that brings you more sales without cutting into your margins too much. Save the big guns—the 15% and 20% discounts—for blowout sales events.
What not to do.
Be careful not to underprice (you can avoid this by starting slow, as recommended above). Underpricing can bottom out the price of an item too fast and bring down the item’s overall value. This can be particularly harsh if you’re going to sell this item for a while. You don’t want to sacrifice long-term revenue for short-term gain.
Likewise, be cautious of overpricing. Pricing your discounted item too high will limit your opportunity for sales and could diminish your credibility as a seller.
Always keep in mind the buyer perspective. Whether someone is buying clothes or toys or shopping for a house or a car, they have in mind a price range based on the market. Similarly, for items commonly found online, they’ll shop around and check out the average rate.
Do the same research so you know what range buyers expect and you can experiment with your pricing within that range.
Use the right tools to manage pricing strategy.
As mentioned above, creating your pricing strategy starts with knowing your numbers, and being informed on the average selling price and demand for your items. The Seller Hub Growth tab shows you trends in your sales, seasonal shopping activity, and competitive pricing so you can adjust your offers accordingly.
Once you’ve decided on your pricing strategy, you can manage your deals and discounts in Promotions Manager, which lets you create special offers including sales events and order size discounts.
Of course, the first step in any sale is getting buyers to your listing with structured data, great descriptions and photos, and mobile-optimized listings.
Promoted listings are another tool in this toolbox, and they work in tandem with a great pricing strategy.
Promoting your listings can drive up impressions and bring more traffic to your items and your store. Once you have buyers viewing your promoted item, an attractive offer or discount provides the incentive to purchase one—or several—of your items.
While promoted listings and a pricing strategy can also work independently of one another, they can be even more powerful together, bringing you more buyers and helping close more sales, move more inventory, and improve your bottom line.
Check out eBay for Business talking about pricing strategy during a Facebook live event.
You must be a registered user to add a comment. If you've already registered, sign in. Otherwise, register and sign in.