So now the goods are soon to be on a boat from China I guess it's time for me to carry out some market research!! OK so maybe that's slightly the wrong order but hey better late than never. I guess actually what I am doing is more 'competitor research' rather than market research - I know the market is there what I need to do is work out the price-points for the various products. As my strategy is to provide the best price available for comparable products I am now spending time researching the price that my competitors to be are currently offering similar products for - this mainly involves searching on the web for these products - what I have noticed so far is that low headline product prices are often matched with higher delivery charges, this is a strategy I want to avoid (a bit like the Ryanair flight for 1p which ends up costing you £50 by the time you check-out).
I have decided a key task for the next week is to build a pricing
model which will allocate all the costs associated with supplying the products to an end customer to each product, e.g. splitting the shipping cost across all of the products etc. This will give me the break even point for each product which will be a very useful starting point for deciding the price. I think the price will then be set by combining the profit margin I think is appropriate and by looking at what competitor's are charging.
Costs I definitely need to include are:
I have decided a key task for the next week is to build a pricing
model which will allocate all the costs associated with supplying the products to an end customer to each product, e.g. splitting the shipping cost across all of the products etc. This will give me the break even point for each product which will be a very useful starting point for deciding the price. I think the price will then be set by combining the profit margin I think is appropriate and by looking at what competitor's are charging. Costs I definitely need to include are:
- The cost of the item
- Shipping
- Import duty etc.
- Post and packaging to the customer
- Any payment commission for online processing (paypal etc.)
- Website hosting
- Marketing?
- Labour?
Labour I am still unsure about, to start with labour will be me hence no external cost but I think I should factor something in for my time in order processing to give a realistic cost of supplying the goods and to future proof the cost models in case I decide to employ somebody to pack etc. in the future.
So that's my key task for the next week anyway, coming up with the prices that will be in place when the site is launched. (I will also be looking at accounting packages as discussed in previous posts and will be posting details of my findings here.)
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