How to price a product in e-commerce?

Pricing is one of the most important and challenging steps for those who work in digital commerce. According to Ecommerce in Practice, a global leader in e-commerce education, incorrect pricing can compromise the entire financial health of the business, generating losses or driving customers away for values outside the market reality.

According to Fabio Ludke, Ecommerce Expert in Practice, the most common mistake of retailers is to make a simplistic account, just doubling the cost value.“A pricing needs to consider a number of factors beyond the direct cost of the product. From production and storage expenses to payment rates, taxes, freight and the very maintenance of the” store, he explains.

To help those who are starting or want to revise their strategy, the expert mentions five fundamental points to define the ideal selling price:

1) Know all your fixed and variable costs: before putting any product in the air, it is essential to have a detailed mapping of the costs involved. This includes raw material, production, storage, packaging, operating costs of the virtual store and marketing expenses.“Ter clarity of the gross costs of e-commerce is the first step to avoid future losses”, warns Fabio.

2) Include taxes and payment fees in the account: many entrepreneurs forget to consider the taxes that affect the sale, depending on the tax regime chosen, be it the Simples Nacional, Presumed Profit or Real Profit. In addition, one must pay attention to the fees charged by payment platforms (credit card, for example). “These values, if not well calculated, erode the profit margin”, highlights the expert.

3) Stay tuned for freight costs, especially in marketplaces: those who sell in marketplaces need extra attention to shipping costs.“O freight can vary greatly depending on the region and sales volume. Therefore, you need to monitor these fluctuations to not leave at the expense”, advises Fabio.

4) Study the behavior of your target audience and competitors: the definition of price can not ignore how much the consumer is willing to pay and what competitors are offering.“A market analysis helps to find a balance between competitive price and healthy margin. Ignoring this point will leave your business completely out of touch and will not talk to your target audience”, says the expert.

5) Establish a realistic and sustainable profit margin: defining an adequate profit margin is necessary to ensure business continuity.“A smart pricing is what sustains store growth in the long term. Therefore, the final value needs to reflect a careful analysis of all the factors that impact your e-commerce”, concludes Fabio.