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Selling Made Simple - Pricing | Red Ink Diary

Selling Made Simple - Pricing

Pricing is a tricky subject. It is about as easy to get right as robbing honey from a hive without getting stung.

  • eBay’s view is that cheaper, in high volume is always better.
  • Amazon not so much, although the lowest price item is listed first.
  • As a buyer we know that basically you get what you pay for.
  • As sellers we know that we have to make money to stay in business.
  • Anybody with more than three functioning brain cells knows there is no free lunch, or shipping.

The following thoughts apply equally to all sellers, antiques, vintage, collectibles, just plain junque, and brand new or commodities sellers.

A Good Deal

Yes everybody wants a good deal, but price is rarely the sole reason they decide to buy. At some time you have probably made the choice to pay a little more after reading a review or a seller’s feedback, I know I have. Keywords here are “a little more”.

Obviously it is possible to price yourself out of a sale. If you are selling an identical product to a competitor and your shipped price is 30% higher, no matter how lovable you are, how wonderful your service or how prettily you pack, you will lose sales.

Conversely, it is possible to under-price yourself out of a sale. “If it is that cheap it must be very poor quality.”

The Price War

In October we saw Amazon, Walmart, and Target get into a price war on new books. They might be able to afford a price war, the small seller can not. No matter what we charge, somebody, either because they are bigger and smarter than we are, or dumber (they have no clue what their costs are) will undercut your price.

If it is an unsustainable business model, chances are good the dumber competitor will go away fairly rapidly. Unfortunately it can damage your profitability for a while unless you can find a way to differentiate your business from theirs.

Stating how long you have been doing business, your superior service, and guarantee, can all help nudge the potential customers perception of your quality upwards. You do have a guarantee, right?

Shearing Sheep & Milking Cows

Auntie May says “You can shear a sheep for many years but you can only skin it once.” Sometimes, just to keep you on your toes she will say “You can milk a cow for may years but only eat it once.”

It is a fact that acquiring a new customer is a lot more expensive than maintaining a repeat customer. If you are a small or niche business you should seriously look at ways to encourage and reward your customer for coming back, without pestering them.

Pre Sales Event shopping invitations, non expiring discount coupons for a future purchase enclosed with the first package, a promise of whopping shipping discounts on the third purchase, reward points on purchases leading to preferred (special) customer status, and rewards for submitting product reviews are all inexpensive ways to keep that customer coming back.

A carefully calculated Customer Loyalty program can demonstrate you are a quality business that will (hopefully) attract a higher class of buyer who is willing to pay for that quality.

Finally

  • Do search for your product online,
  • note your competitors prices and shipping charges before setting yours.
  • Don’t be ashamed to copy a business practice that makes sense.

You can always do it as a ‘limited time offer’ for a month or two. If it doesn’t work for you, quietly drop it, after all, it was a limited time promotion. If it works well, then, “due to popular demand . . . ”

Y’all come back!
Henrietta!

5 comments.

  1. Wise words as usual. One of the main problems is sellers get crazy when trying to ‘beat out the other guy’ in pricing. Competition is good and healthy, but cut throat mentality is deadly.

  2. A lot of what you are describing can be automated. There are pricing and customer loyalty programs out there for eBay and Amazon (not sure about customer loyalty, but definitely pricing) sellers.

    While it’s true sellers may cut their own throats under-pricing themselves you have to keep in mind that eBay requires you to make sales to make sales (via best match). If you aren’t competitively priced don’t expect anyone to ever see your listings.

  3. Thank you for the information, however, this is not a “how to sell on eBay blog.”

    People who read this blog are looking for a viable way off eBay because

    • they pay fees (unlike Diamond Sellers),
    • they do not get their DSRs whitewashed (unlike Diamond Sellers),
    • they can’t make a profit, and,
    • they are all to aware that their listings do not get seen.

    Readers will be interested to know that NullApps developed a DSR Report application for eBay and received an award for it.

    I have no objection to promotional comments but I do prefer that you make full disclosure, see my Spam Policy page link in the right sidebar. I have done it for you this time.

  4. The only thing I see on that page is

    Does not tolerate spam. Spam comments are deleted.

    Since you didn’t delete my comment I’m assuming you don’t view it as spam. Yeah, I know that’s the same thing a buyer says on eBay when they remove their unpaid item strike.

    I don’t see anything about requiring the disclosure of any connections I may have to eBay in every comment I make. My comment was not promotional of eBay my DSR Report application, nor myself. In fact I would have assumed any mention of DSR Report would have been completely irrelevant to the discussion of pricing in ecommerce and would have been seen as spam.

    What I will disclose is that I champion automation and write applications to that end. That is who I was speaking as. Another disclosure is that I have developed an automated pricing application of my own for eBay sellers (I considered Bonanzle but it wasn’t a good fit). I’m not going to bother linking to it since it was not why I posted.

    Finally, my last paragraph of my original comment was a criticism of eBay and a reply to the first comment. It was a defense of why we must sometimes act a bit crazy. I regularly see on places like TameBay where people talk about “stupid pricing” and “wanna-be” businesses trashing brands with their low prices.

  5. > NullApps
    > I don’t see anything about requiring the disclosure of any connections I may have to eBay in every comment I make

    Late last year the U.S. Federal Trade Commission (FTC) updated their decades old policies regarding endorsements and testimonials. There were other similar policy changes, but the press release below covers the larger policy update.

    http://www.ftc.gov/opa/2009/10/endortest.shtm
    FTC Publishes Final Guides Governing Endorsements, Testimonials
    Changes Affect Testimonial Advertisements, Bloggers, Celebrity Endorsements

    “The revised Guides also add new examples to illustrate the long standing principle that “material connections” (sometimes payments or free products) between advertisers and endorsers – connections that consumers would not expect – must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other “word-of-mouth” marketers.”

    Word-of-mouth marketing is not always blatant advertising. It can be testimonials, paid cheerleading tweets, etc. In general WOMM can cover comments; product review ratings, blogs, blog comments, etc.

    The actual FTC policy:

    http://ftc.gov/os/2009/10/091005revisedendorsementguides.pdf
    Federal Trade Commission
    16 CFR Part 255
    Guides Concerning the Use of Endorsements and Testimonials in Advertising

    Containing things such as:

    “an endorsement means any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”

    Note the first “or”.

    “When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”

    In other words people need to be informed when a connection exists.

    For example:

    Amazon is attempting to crack down on the practice of products receiving glowing reviews, from the product makers.

    Scot Wingo posting seemingly independent articles about eBay now includes “I am long Amazon and Google. eBay is a minority investor in ChannelAdvisor where I am CEO.”

    Had Henrietta not mentioned “NullApps developed a DSR Report application for eBay and received an award for it”, no one may have known you had a “material connection” to eBay. However tenuous.

    In this case it matters because DSRs affect Best Match, and you mentioned “eBay requires you to make sales to make sales (via best match)”. That and the more important when on an eBay related blog, when there’s a material connection between the poster and eBay people want to know about it.

    The FTC policy provides for informing the public about a writers affiliation. Whether the writer “views expressed by that party are identical” or not to the the company.

    There’s nothing wrong with a little self promotion. Ex-eBay employees and third party eBay vendors do that a lot. And people are free to ignore the Federal Trade Commission; at their own risk. But it’s a very bad business habit to not mention a “material connection” to a major U.S. corporation. Tenuous or not. Whether you agree with that corporation or not.

    //

    “Pete Blackshaw, one of the founders of WOMMA, advises brands and agencies to exercise conservative policies. Brief and visible disclosure is enough for the time being, no need to post a whole contract. Just be smart, transparent, and honest.”
    FTC Guides are Law this Week (11/30/2009)
    Word Of Mouth Marketing Association (WOMMA) womma.org

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