1. Look at your competitors’ prices and get a range. According to Johnson, “Your consumer has in their mind some idea of what’s the right price to pay for your product and if your prices are going to be dramatically different, higher or lower, you’re going to have problems.â€
2. Objectively compare your product to your competitors. Compare features that a consumer would notice and value. Determine if your product is better than similar products, or is it lesser? Don’t be emotional when comparing – it’s not better just because it’s yours. If you can’t clearly specify what makes it better, then it’s not better.
3. Decide how you want your product to be perceived in comparison with your competitors. Are you the “quality†brand? The “low-cost cheap†brand? The “value-added†brand? Your website should reflect your conclusion. Your customers won’t pay top prices for an item from a shoddy-looking website. But if you’re going to be the budget brand, you don’t want a tricked-out, fancy website – just something simple.
4. Calculate your costs. What’s the cost of goods if you buy this many vs. this many? What’s the cost of shipping? Factor in the variables – any costs you forget come directly out of your profit margin.
5. Determine the quantity you need to sell to make a profit by looking at the price range you can charge and the costs of selling your products.
6. Take a reality check: Ask yourself, “Given what the market is willing to pay and what I think I can sell, can I make a profit?†If not, you did your research, thought it out, and saved yourself a lot of wasted time and money – move on. Look at something else.