How to Price your Products on Shopify
Last modified: May 7, 2021
There are several things that can make a business successful on Shopify. One of those things is to make sure that you’re pricing your products successfully online. There are many ways that people think you should calculate your product prices.
But it is an important point on Shopify. Too low a price and even though the unit profit is there, the overall profit of your store is too low because of the fixed costs within the business like Shopify basic plans, marketing, leases, insurance and more.
So what are the options for you to set your store’s prices?
The first thing to look at is how much of a profit margin you’re going to make. Ideally, you should be aiming for a profit margin of about 40-70%. This is the value of the price that is profit. Therefore, items that cost the consumer $10 should cost you between $3 and $6.
This allows you to promote your product at times with discounts that could go up 10-20%, which is significant enough that customers might be interested in them. Therefore, you can still make a profit in sales at a good level.
Another thing is to consider how much you’re going to sell at specific prices. For instance, if you can sell about 1000 units at $10 but only 100 units at $15, then you might be best selling at $10. But that does depend on the profit margin of the unit. If the unit costs $9 for you, the profit is still higher at $10 selling point.
This does take some time to find out and you might need to try out some prices before the best price is found for you.
You can also use your competitors to discover what prices you might want to sell at. There are lots of competitors out there for your products, even if they aren’t the same, there are going to be comparable products which you can use.
This isn’t the most accurate because research has found that consumers will spend more money with a brand they trust. However, if you can build good reviews by using apps like Vitals or other review apps, then you can build trust with your audience and this can help you charge more of a premium, while also being competitive with others.
A good example of this is if your competitors are selling a product at $10.99 and have a 4.4 rating on a review site, but you have a 4.8 rating on the same review site, you might be able to charge $11.99 for the same product. You will get more profit per unit, but at the same time, you could get more sales because you have a better reputation.
Final Word: How to Price your Products on Shopify
There are numerous ways that you can price your products on Shopify. Above are three options to easily price your products that allow you to earn a profit and gain sales without pricing yourself out of the market. Part of the process is making your brand more trustworthy.