How to Set Prices for Products When Selling Online
When you sell your wares on sites like eBay or Craigslist, setting a price can be a critical moment. If you’re not careful, you can cut yourself and lose money. Here’s how to find out how much your item is worth and get as much money back as possible.
Learn Flexibility With Your Price
While some cultures emphasize the art of negotiation, retail stores and large corporations have taught us that prices are fixed things. Many of us even assume that the price of an item should be the cost of parts and labor plus a small fraction more. Unless you bought it used, in which case asking for more than you paid for it is outrageous.
However, the truth is that there is no objective “right” price – there is only one that someone is willing to pay. In economics, there is a concept aptly called willingness to pay . Simply put, this is the maximum amount that a person is willing to exchange for a product or service. For each trade, everyone has this amount. For example, some might not want to spend a dime on a smartwatch. Others may be willing to pay up to 10,000 people . The only thing that matters is that you find enough buyers to cover your expenses.
When you sell your old stuff, your costs have already been paid, so you don’t have to worry about a sustainable business model. All you have to do is find someone who wants to buy your product at the highest possible price. The bottom line is that you can set your price as high as you want and the worst thing that happens is that it won’t sell. You can always make changes to the list later.
Start by observing the market
The quickest way to determine how much your product is worth is to look at what other people are selling similar products for. Let’s take Craigslist as an example. Let’s say I want to get rid of an old black leather futon. I can look for similar futons in my area. I see similar ads going for $ 150-250, depending on specs and condition.
The main thing to remember is that these are selling prices, not necessarily what they will actually sell for. These listings may not be for sale at all. You can negotiate with them. The fact that someone is listing a product at a certain price does not mean that the market is willing to pay for it. However, it can give me an idea of where the price of my futon is. If I wanted $ 500 for my futon, I probably couldn’t sell it while everyone else is pricing theirs at $ 250 or less.
However, price isn’t the only thing you should be comparing. As the G Margin blog on financial advice explains, the condition of your items matters . We often tend to overestimate our items, despite their condition, because we bought them when they were newer than they are now. G Margin explains with a simple example of selling socks:
Be realistic about the condition of your subject. I once bought a lot of 200 “mostly new” Under Armor socks in the hopes of selling them on eBay and making a profit. I lost almost all of my investment after only about 12 pairs were sold. There was demand for new socks, but not for used socks.
Of course, you probably won’t be selling used socks on eBay. But the state of your belongings still matters. And that’s not too bad either – a scratch on your leather couch or phone might mean you won’t be able to sell it as much as a new one, but that means you have a broader market. You can sell to more people for a lower price. So pay attention to the condition of the item you’re selling and if it’s not as good as the items you are comparing it to, lower the price a little.
Use price trackers to see what has been sold
As we mentioned earlier, there is a difference between what an item is sold for and what it is being sold for. On eBay, you can view completed listings to see what items are selling (and not selling) for. This is especially handy if you need to sell on eBay, but it can help no matter where you decide to sell. The completed list doesn’t just tell you how much something the seller thinks something might be worth. He talks about what the person actually paid money for.
You can also use the CheckAFlip price tracker to compare completed listings with currently active listings for specific search criteria. It will also show you the average number of ads that have successfully sold for a specific subject or category. Not only can this give you an idea of where to set the price, but it can also tell you how much to keep selling it if you don’t find a buyer right away.
WorthMonkey provides a similar service but goes beyond eBay listings. Crawling eBay is great because you know when a particular ad is selling. WorthMonkey, on the other hand, compares listings from Amazon, eBay, and Google search results. Rather, it will give you a broad view of the market as a whole.
If you really want more details, you can also use trackers for individual items as if you were buying. We have services like NotiCraig that will send you an email when the item you are looking for appears. You can use these same tools to view items similar to the ones you want to sell and find out how much other people are selling them for.
Accounting for shipping costs and other additional costs
The product itself isn’t the only thing you’re selling. Depending on what you’re selling, you’ll also have to box it, pay for shipping, or arrange for someone to come to your home. How much work you have to do to get the item out of your hands to a buyer can affect the price. This is also an opportunity.
Returning to the futon example, suppose you need to deliver furniture to a customer. Now you have the option to opt out of shipping, which will save you money and time. However, if you have a vehicle that can transport it, or have access to one, you can offer shipping at an additional cost. As one avid Craigslist seller suggests, calculate how much your time / gas is worth and base your shipping charges on the following:
If you can deliver the product, it will significantly increase your customer pool (especially if it is a large product). Don’t be afraid to charge a fair price for your time / gas. I am an avid cyclist and offer free shipping for my bike if the contents fit in my bag and the buyer is within a certain distance of my home. Include the shipping option in the title itself.
If your customer chooses to pay for shipping, you will earn some extra money. If they want to pick it up themselves, they will feel like they are making a deal. In any situation where you can monetize your shipping, this is a good idea. Just make sure you don’t charge so much for shipping to drive yourself out of the market price. On sites like eBay, shipping is more or less optional, so imposing unrealistic shipping fees on your customers will only put them off your ad.
Of course, determining your price is only one piece of the puzzle . You also need to choose a suitable place to place your products , write a good description, and make your search easier. However, setting a price for your items is no different from any other negotiation . You research what the other side wants, what it is willing to part with in order to get it, and you try to get as much of your side as possible.