If you want to start your online store, you will undoubtedly stumble upon Shopify. It’s hard not to. The e-commerce platform is one of the most popular worldwide, with over 1.7 million active merchants worldwide.
You’ve come to the right place if you’re wondering what the latest Shopify pricing is for your new online store.
Many factors influence a person’s buying decision. Pricing is one of them. Needless to say, in any case, a reasonable approach is the key to success, especially when it comes to pricing policy, and the decisions made are reflected in the financial results of your activities.
In this article, we will focus on the different pricing methods that you should consider and possibly apply in your online store.
If there are any issues, there are Shopify development services MakeBeCool.
1. Product Margin
First of all, pricing depends on the purchase price of the product and the desired marginality (advertising costs, Shopify commissions, applications, payment system, etc., must be taken into account), as well as on the product’s value for a potential buyer.
The markup is 300% on average and decreases as the price increases.
When pricing, consider the product’s value for a potential customer and, based on this, evaluate whether you can make the extra charge you need.
Examples of pricing depending on the purchase price + shipping costs are presented below.
- $3-5 – sale price $15-20
- $5-7 – sale price $20-25
- $7-10 – sale price $25-35
- $10-13 – sale price $35-40
- $13-15 – sale price $40-50
- $15-20 – sale price $45-60
- $20-25 – sale price $55-65
- $25-30 – sale price $60-70
The recommended margin of the product is $25 – advertising on Facebook is constantly becoming more expensive, and it becomes more difficult to achieve the optimal price for the purchases, so if the product costs $5 the purchase, and you sell it for $15-20, you probably won’t have any income.
A lot depends on your skills, not only on them but also on setting up additional sales in your online store. Also, don’t forget the Shopify and Stripe fees (about 5%).
At the product testing stage, it is recommended to indicate a price with a low markup and raise it after receiving several sales.
2. Market Research
The first and main step is to analyze the prices in the market. Many mistakenly believe setting a price lower than the competition is a winning strategy.
We often come across cases where a company sells goods at a price below the market average, but uses the most expensive materials, purchases relatively expensive goods, and generally incurs higher costs.
Of course, the quality of the product is much higher.
However, a “lowest bidder” race, especially in a perfectly competitive environment, results in near-zero profits for a company.
Therefore, it is very important to study the market and analyze the value of your product before setting a price.
3. Numbers “Decide”
You have probably noticed the prices, for example, $1.99 or $5.99. Have you ever wondered why the prices are written the way they are?
Many studies show that this way of writing the price tunes the brain that such a product is cheaper, that the deal is good, etc.
The prices of $9.99 and $10 have a negligible difference of $0.01, based on the consumer’s state of mind, it/she unconsciously sees a colossal difference.
This strategy will work well for your business, but don’t abuse it too much: $9,999.99 will look suspicious.
4. Discounts
Why not put prices on products with discounts but at the same time show the original prices? This assures the buyer that he/she is getting a good deal.
In addition, the indication of the initial price makes your site more transparent, which is an important factor in the buyer’s confidence in the site.
You don’t have to reduce the product margin – discount the overpricing to grab the audience’s attention and make money, but remember to do everything within reason.
At $49.99 $250, people will not believe that the product was worth 5 times more expensive before.
You can limit the offer in time and clarify to your potential buyers that the purchase decision cannot be postponed.
Also, you do not need to put the same discount on absolutely all products in the store.
It is recommended to add discounts on best-sellers (up to 50%), but on other products you do not plan to advertise, you can leave discounts at 20-30% or completely remove them.
Shopify reportedly lost about $1.2 billion in revenue in the second quarter of 2022
Conclusion
This short article covers a few tips for pricing your online store that apply to almost any business. Use and test different pricing options to find the best formula for your business.