Determining a Realistic Price

Determining a realistic price can be easy if there are already other people selling the same thing that you are, and in many cases, you can do some research and come up with fair prices. You then will just need to determine whether you want to charge the same or offer them for a little less and include that in your marketing strategy. If you are selling something that is unique, that you made, you may have to figure out what you will charge based on the cost of materials and time. If it's not something you made, usually the supplier will give you a "suggested retail price", which is the price that they feel the item would reasonably sell for. A lot of it comes down to judgment and trial and error. You can also enlist the opinions of friends and relatives, and even go onto places like craigslist and ask for people's opinions on the price of the item to gauge whether the price you have in mind is too high or low. It's always beneficial, when applicable, to research other web sites that are selling similar items, and go from there.

The three major ways in determining the price you will charge for an item are cost-based, value-based and market-based pricing.

• Cost-based pricing: This method is where you set a fixed rate to charge, not by individual items. So you would determine you want to charge twice what the item cost, or 150% or whatever the number you come up with is. For example, if you purchase a CD player for $10 and you decided to pay twice the amount, you would sell it for $20, and if you had another product that was a car charger that you purchased for $5, you would then sell it for $10. This way you don't have to figure out prices based on what the item is, but rather you just always double the price based on what you purchased it for. Just be careful if you use this method to factor in any hidden costs as well as costs such as shipping.

• Value-based pricing: This method of pricing is basically pricing it depending on the value of the item, what the customer is willing to pay based on what value it brings them. For example computer software is not charged based on the cost, but rather how much value it brings to the user.
  

• Market-based pricing: In this method, you look at what competitors are charging for the same or similar product and then determine whether you want to charge less, the same or more. This portion will be determined by what your goal is. If you want more people to buy your product which will result in smaller profit margin, but more products sold, so in the end, a larger profit margin, then you would charge less. The next paragraph goes over this concept with a little more detail.