Confused on How Exactly to Price Your eBay Products? Read This
By Mark Alan Davies

How to price your eBay products

Pricing your items on eBay can be quite tricky. Obviously they are your products to sell so you can sell them for whatever price you want but there's a few things to bear in mind.

The main point to consider is that you MUST be competitive in your pricing. Sounds obvious but it's a point worth making anyway. It's no good giving your eBay items an unrealistic price because basically they won't sell, or at least they won't sell in the quantity you need them to. By this I mean, yes you might sell a few because you will get buyers that are prepared to pay a premium for a product they badly want or need, or some buyers may pay a premium price on eBay because you as the seller have a great reputation along with great feedback and dispatch your items quickly BUT if you over price your eBay products you are excluding potential eBay buyers of your product by over charging. Some buyers simply won't pay the premium. What you need to do is appeal to as many potential customers as possible.

So, you know the price you have paid for your product. The next step would be to have a look on eBay at what competitors are charging for the same item. Chances are there will be a quite a varied price range and you need to research and see how fast these competitor items are selling and roughly the average price they are selling at.

Do NOT try and be the cheapest on eBay. If you can be the cheapest and still make a profit after fees then that's great BUT do not try and purposely be the lowest priced seller of your item on eBay. I see a lot of people do this and I wonder why. All that happen is that it will drive the price DOWN, meaning less profit for you and everybody else.

It's a race to the top not the bottom.

I'm going to tell you now about one simple method you can use to determine the price of your eBay products as a seller. What you can do is use gross profit to price your products.

To do this you take your sale price. Take your profit figure. Then divide your profit figure by your your sale price.

An example

You sell something for 3. You're profit is 1. You then divide the small figure (profit) by the large figure (sale price).

So 1/3 = 0.33. That is 33% gross profit on that sale.

So lets say that you've done your research and these figures work for you, you now know that you can sell your eBay items at 33% gross profit. But how does that help me price my eBay products I hear you say? Let me explain.

Now all that you do is take your purchase price, in our example it would be 2 and the multiplier used to get a gross profit of 33% would be 1.5. Lets now say you use this figure across the board, or across you're whole eBay shop pricing.

Remember 1.5 is our mulitplier so, we purchase products at:

1 x 1.5 = sale price needs to be 1.50

5 x 1.5 sale price needs to be 7.50

10 x 1.5 sale price needs to be 15

And so on... In short 1.5 times our purchase price gives us a gross profit of 33%.

But what if 33% doesn't work for my products?

Good question. So here are some more multipliers you can use.

10% = 1.11

20% = 1.25

30% = 1.43

33% =1.5

40% = 1.67

50% = 2

60% = 2.5

Remember, all you need now do is take your purchase price, use the multiplier to make that amount of gross profit.

How does this help?

Gross profit is the figure on which most accountants, book keepers and tax officials will use. How much did you pay? How much did you sell it for? Pay tax on the difference. Not quite that simple as you can deduct expenses and costs to give you NET profit but gross profit are the basic figures that all other figures flow.

Let us say you download your monthly eBay sales figure for November and it was 5,000, $ or £ it makes no difference. You are working on a gross profit of 50%. You can work out your gross profit figure on eBay for that month then in a few seconds. It's 2,500.

Let us say you download your yearly sales and it was 80,000, again $ or £ it makes no difference. Gross profit of 50%. So that's 40,000 for the year then.

You can now work out your gross profit for ANY business on ANY figures, quickly and simply.

So next time somebody asks you how much money you're making on eBay, you can tell them in about ten seconds. Or go and ask an eBay seller the same question with a pricing policy that's all over the place and they won't have a clue.

Hope that article was informative and you find it useful. As usual, feel free to comment.

Mark Davies

FREE eBay templates and useful information for sellers available on my blog, see you there!

http://www.mark-davies-blog.com

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