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Pricing High or Low when Launching

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Laughingman21

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I'm getting ready to launch and I've now started to get some doubts over my pricing strategy. The products I sell are branded items already on sale from other sellers. To keep fulfilment costs down (per unit) and encourage customers to buy more than one item at a time, I've been planning on offering products at a higher unit price, but then give discounts for orders with multiple units per product in an order. This also gives me the benefit of higher profit margins if people only order one at a time.

However, after looking at competitors websites and seeing their lower prices, I'm starting to doubt myself. I'm worried that I'll price myself out of the market. However, if I do that, will I put off new customers with price increases later?

I know I need to launch and just test what the market does, but I'd love to know you're opinion on pricing at launch. Do you think it's better to:
  • Price High - then drop prices later if I'm struggling for sales
  • Price Low - then try increasing prices once I've got sales
Any thoughts, opinions or experiences would be great.
 

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Watching because I’m about to face the same decision dilemma. I keep telling myself that the value proposition is worth the higher price (I can’t even manufacture mine for what my competitor costs retail).

Any way you can solicit feedback from your target audience? Almost very decision I’ve made so far was with the actual customer’s input, working great because the product is for them.
 
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Laughingman21

Laughingman21

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Anyone?
 

SolopreneurGrind

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I think you really need to think long and hard about how you want your products/brand to come across to consumers. Unfortunately there's not enough info for me to answer this for you, but are you selling a:

1) cheap commodity
2) luxury/specialty product

What I mean is: are you selling something that is just like the others, or is yours unique/higher quality/special in some way?

If you're #1, your product is just like the others with a brand name on it and you can't manufacture it for cheaper than others are selling it for, you're in big trouble.

I'm hoping you're a #2, in which case price sensitivity isn't as important, because if you can truly show the added value, benefits and features of your product, you should be able to sell it for a higher price. This is the same reason people pay more for a Mercedes than a Toyota.

Hope this sheds some light on it, let me know if you need more info!
 

richRich

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However, after looking at competitors websites and seeing their lower prices, I'm starting to doubt myself. I'm worried that I'll price myself out of the market. However, if I do that, will I put off new customers with price increases later?
As soon as you can clearly communicate to your customer why your product is worth more, your doubt should vanish and you will stand behind your prices.

Generally, I'd say that customers don't like price increases. You will definitely upset existing customers and potential customers who already saw the old price. New customers will bring more money, though. It's a trade-off that is very product-dependant and that must be calculated thoroughly.
 

Jaden Jones

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Like everyone else, its tough to say without knowing what you are selling, I would always lean to being a little cheaper to increase your customer base, I dont mind small price increases at a website im familiar with that checks all the other boxes. I dont mind paying a a couple % more for convenience and trust. You will find most good customers care more about the service and experience than the price, if all the care about is price, your selling a commodity.
 

Wiggly0607

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I'm getting ready to launch and I've now started to get some doubts over my pricing strategy. The products I sell are branded items already on sale from other sellers. To keep fulfilment costs down (per unit) and encourage customers to buy more than one item at a time...
Any thoughts, opinions or experiences would be great.
Just an aside, but aren't you violating the commandment of control here by engaging in a commodity business? This would be why you are having such a difficult time with price-it is determined by your competitors largely.

Sorry, not trying to hijack thread, just some thoughts re: the bigger picture.
 
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Laughingman21

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Thanks for the responses. Just to clarify, the products I'm selling are not my brands. They're other companies brands that I'm reselling, hence my doubts over the pricing.

I don't want to get into a price war with competitors are end up in a race to the bottom on pricing. No one wins. Instead, I want to offer value in different ways and hence try to justify a higher price.
 
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Laughingman21

Laughingman21

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Just an aside, but aren't you violating the commandment of control here by engaging in a commodity business? This would be why you are having such a difficult time with price-it is determined by your competitors largely.

Sorry, not trying to hijack thread, just some thoughts re: the bigger picture.
Ideally, I'd like to produce my own product and sell it, but the initial costs are too high. I thought the best way to generate some money would start off selling existing products and learning about the market which has the added benefit of giving me market knowledge. This should help in the final product development (when I get to that stage).
 

MHP368

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well how are people finding your product?

am I just googling it? if so the competitors offer is right there

is it on amazon? i'm too lazy to leave the site so if its on page 1 i'm sold

Did I have to fight through a sales funnel and 2 pages of copy? price it however high you want , i'm still here right?
 

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Laughingman21

Laughingman21

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Have you launched yet or has the pricing stopped you?
Not launched yet. Still waiting on fulfilment centre.

I'm thinking go lower and be similar to competitors then increase price once I've got a customer base. That way it'll be easier to find and attract new customers.
 
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Laughingman21

Laughingman21

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well how are people finding your product?

am I just googling it? if so the competitors offer is right there

is it on amazon? i'm too lazy to leave the site so if its on page 1 i'm sold

Did I have to fight through a sales funnel and 2 pages of copy? price it however high you want , i'm still here right?
Mainly Google, hence I think I'll have to be similar to competitors.
 

Xeon

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I'm thinking go lower and be similar to competitors then increase price once I've got a customer base. That way it'll be easier to find and attract new customers.
So that means you'll be starting a price war from day one of business? Do you have the resources to sustain that for a prolonged period of time while the customer base gets built up?
 

JScott

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You're asking the wrong question.

You should be doing one of the following:

1. Define your desired price point for your product and then creating a product/brand that provides value at that price point; or

2. Create a product and then survey the market to determine the price point at which that product provides sufficient value.

Sounds like you want to do #2, but instead of figuring out what your product is worth before you launch, you'd rather launch and then adjust the price based on the launch.

This is sub-optimal, as your initial price will serve as an anchor to future customers. If you have to lower your prices later, this will send a message to your potential customers about the value of your product. If you raise your prices later, this will artificially drive down the perceived value of your product (they were anchored at the lower price point and believe it's worth less).

If you're going to go the #2 route and plan to adjust your prices later, you should have a plan on how to re-anchor your potential customers to the new price. Change your product, change your brand, change your sales channels, etc.
 

MJ DeMarco

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So you're asking how to price a product that is commodified, not your brand, and has no relative value skew in the eyes of the market?

My answer is as cheap as you can -- because that's your value skew.

Why on earth you'd want to get into a business like this is beyond me... money chasing?

I don't want to get into a price war with competitors are end up in a race to the bottom on pricing.
Duh, but that's what you signed up for.

When you decided to sell this brand with zero value skew, you've decided to be in a business with a race to the bottom.

Good luck.
 
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Laughingman21

Laughingman21

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So that means you'll be starting a price war from day one of business? Do you have the resources to sustain that for a prolonged period of time while the customer base gets built up?
I don't plan on trying to beat them on price. A price war is the last thing I want and a couple of soon to be competitors are currently screwing themselves over doing exactly that.

Instead, I want to initially position myself differently through better marketing that focuses on meeting the customers wants, not on the product features. This will hopefully get money coming in so I can move into developing my own products. This takes cash and knowledge I don't currently have, hence I thought selling other products would be a good way to learn the market and what customers want.
 
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Laughingman21

Laughingman21

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So you're asking how to price a product that is commodified, not your brand, and has no relative value skew in the eyes of the market?

My answer is as cheap as you can -- because that's your value skew.

Why on earth you'd want to get into a business like this is beyond me... money chasing?

Duh, but that's what you signed up for.

When you decided to sell this brand with zero value skew, you've decided to be in a business with a race to the bottom.

Good luck.
The product is commodified, but in a fast growing market and one that I want to get into for a number of reasons.

Initially, I don’t have the capital or expertise to develop my own product, but I plan to learn the market and build a customer base selling other brands. Once I have the cash, I can develop a product that matches the markets needs that I’ll have a good understanding of.

In the short term, I plan to offer more value to customers even when selling commodified products through:
  • Next day delivery
  • Free delivery on orders over a certain size
  • Partnerships with other companies
  • Subscriptions - including a flexible offering
  • Events
  • Great, quick & east website
I understand the risks in selling other companies products and it’s weighed on my mind a lot, but there are plenty of companies out there making money selling other’s brands. I’ll start there and move onto products that fit the CENTS framework with the experience I gain.
 

ShamanKing

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I still only get gas at Chevron regardless of pricing :) but the lines at ARCO are much longer.
 

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