Monday, November 30, 2009

Quick Tip #17 - Another Thought on Prices

Often I see sellers saying that they aren't making much on their products because they think if they raise their prices they will lose sales. Here's something to think about:

If you have a product priced at $5 with a profit margin of $2 and you sell 10 of them your profit is only $20. If you increase the price to 10 your profit margin is now $7 and if you only sell 5 your profit is now $35.

Now this is only talking in terms of numbers, there is a psychological effect involved in prices. Higher prices imply higher quality, by underpricing your work you can give the impression that it's cheaply made which can hurt your business. If you want a pair of shoes that won't fall apart in 3 months do you buy a $15 pair or a $60 pair?

Previous Posts on Pricing:
Breaking Down Your Costs

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