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web sites + pricing strategy

updated thu 8 feb 01


Janet Kaiser on tue 6 feb 01

Here is an e-article, which I think could be
useful for some Clay buds starting out with
selling sites... As far as I recall, some
aspects I have not seen discussed before and
others sort of tie in with recent discussion.

Although not "art" orientated, it is
illuminating about aspects which must be taken
into consideration when pricing for web sites.
Artists/makers will have to add their own input
compared to the "drop shipping" here, but I hope
it helps.

The usual dementi: I have nothing to do with
this site or products.

Janet Kaiser - Getting used to a cold, damp
house & wet and windy weather, following a
glorious week in the dry snow by day and a warm
feather duvet by night.

The Chapel of Art . Capel Celfyddyd
Criccieth LL52 0EA, GB-Wales Tel: (01766) 523570

Pricing Your Products
Published by

In our scramble to find a way to offer the
lowest prices on the
Internet, we often overlook the basic steps that
we should be taking
BEFORE we even offer a product for sale. We also
overlook something
even more important: you don't HAVE to have the
lowest price in order
to make great sales. Following are some things I
do before and after
determining my bottom line. I sell by having
products drop-shipped
for my sites, which works VERY well, but these
steps should be
covered no matter your distribution method.

<> Should you be selling this item now?

Snowboards don't sell well in the summertime.
You may have a hard
time moving a pair of roller blades in January.
Don't waste your
time and your site space marketing products out
of season. Ask your
supplier for a little historical information
regarding the best time
to sell their products. Believe me, to
everything, there IS a
season. They have the figures. If they don't
want to share this
info with you, find another supplier.

<> Identify your costs

Profit isn't just the difference between
wholesale and retail.
You have other costs to consider. Think about
every penny you
spend in order to get that product to the
customer's door, and
plan accordingly. For example, your merchant
account probably
costs you about 2.2% plus 30 cents per
transaction. On an item
you'll sell for $20, that's 74 cents. Don't
forget that calculation
when pricing the item. Are you warehousing the
item? How much is
that space costing you per item per month? Did
you spend money
stocking up on shipping materials? How much per
unit? What about
advertising? Monthly hosting costs? You may need
to project some
estimated sales in order to arrive at some of
these figures.

This may seem very complicated, but it's really
not. Just take
the figures one at a time, and you'll arrive at
a wholesale cost
plus an amount that, when added together,
becomes your initial
ESTIMATE of "cost of goods sold". Identifying
all your costs is
critical if you want to price your products

<> Check out the competition

Search on the item you plan to sell. Check out
the competitors'
prices. But DON'T get caught up trying to beat
the wrong
competitor. You need to stay within your

My stores are built in Yahoo Shopping
90% of my traffic comes from there. When I seek
out my
competitors, I look for other businesses like
mine ONLY in Yahoo
Shopping. Then I compare.

If I'm thinking about selling a product, and I
get 1,500 hits in
400 stores on that item in Yahoo Shopping,
forget it. If I get a
hundred hits in 20 to 40 stores, I'll look into
it further.

So check out the competition, narrow down your
product list, make
a note of the five lowest prices you find, and
then ask yourself
another question.

<> Is anybody going to buy this thing?

This doesn't have much to do with pricing, but
it should be said.

When considering products, there's unique, and
then there's too
unique. Yak Cheese may sound like something that
nobody else has
for sale on the 'Net. There's a reason for that.
If you sell
more than 3 boxes a year, I'll EAT some.

Unique is Rain Barrels made in Maine. It's
Exotic Cheeses imported
from Italy. Silk Parisian Lingerie. Things you
don't see every
day, but would be proud to give as a gift.

Then there's "common". Everybody and their
grandmothers are selling
Alabaster Figurines on the Internet. Do they
sell? Sure, in a
limited fashion. Do you want to sell them? Not
if you want to make
any real money.

In my experience, unique products, like Rain
Barrels and Parisian
Lingerie, DO sell. So do Coleman Sleeping Bags,
and Conair Hair
Dryers. BRAND NAMES sell. Look at your potential
product, and ask
yourself honestly if YOU would buy it on the

<> Set your price

Take the five lowest prices you collected on a
product in your
list that has survived the above. Calculate your
estimated cost,
then subtract that from the lowest price. If you
don't see at
LEAST 15% profit, don't bother.

If you do, there are a couple of ways to
proceed. You can
undercut the lowest price in your "venue" by a
bit, and hope to
"kick off" the product and get yourself noticed.
Chances are,
though, that the following week you'll find that
someone has
undercut YOUR price by just a bit. That becomes
a losing game.

I generally set up a couple of "loss leaders".
These are
desirable items (in my general product line)
that I sell dirt
cheap just to bring in customers. Then I price
the rest of my
products at the second or third lowest price in
my venue. The
customers come in for the loss leaders, and then
I can market
everything else to them via email. I spend a lot
of time making
my site look better and easier to navigate, and
pay a great deal
of attention to my customers.

That makes me more reputable in the eyes of the
customer. You'll
find that people don't mind paying just a little
more if they
feel comfortable in your store. They don't like
to worry that
they're buying from a "hack" who may not
deliver. Nothing says
"hack" like a cluttered, confusing storefront.

<> Follow up

After you've sold an item for a month or two,
revise that "cost
of goods sold". Measuring past performance is
just as important
as setting the correct price to begin with. If
sales drop,
recheck your competition. If that's not it, drop
the product,
or shelve it until the "season" comes back
around. Don't get
sentimental about your products, and NEVER just
let your store
sit there in limbo once it starts to make money.
This is a
dynamic business; stay on top of it!

<> A last word (or three)

Retail pricing on the Internet is so fraught
with permutations
that it would be impossible to cover everything
here, even if I
KNEW everything. The steps above are just the
basics of a process
that works for me. Hopefully something here will
strike a chord
and work for you as well. Patience and
persistence are the keys
to a successful Internet business, so hang in
there, and don't
quit the day job for at least a couple of weeks.
Chris Malta

Chris Malta has been working on, teaching about,
and spending way
too much time with computer systems for 18
years. He publishes The
Drop Ship Source Directory, which lists
wholesale distributors of
over 400,000 Name Brand products who drop ship
for web site owners.
He's webmaster and half owner of, and lives,
eats and sleeps on his keyboard