2016-12-02 00:00:00 Selling Online English Learn how to use various proven methodologies for pricing your small business's products for online sales. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/03/08214728/Restaurant-manager-entering-product-prices-on-register-in-front-of-dishes-and-equipment.jpg How to Price Your Product for Online Sales

How to Price Your Product for Online Sales

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Pricing a product is often more an art than science. Below is a set of formulaic steps anyone can use:

  1. Create two price points using the formula below
  2. Perform A/B split testing on these prices
  3. Repeat steps one and two to converge on an appropriate final price

A commonly used formula to decide on prices for step one is:Retail price = (cost of item / (100 – markup percentage)) x 100

For example, assume the your product costs $20 to manufacture and you want to try 60% and 75% markups. The retail prices to use in your first A/B split test are:

Retail price #1 = ($20 / (100 – 60)) x 100 = $50Retail price #2 = ($20 / (100 – 75)) x 100 = $80

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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