Posted by Alex Jackson on 6th Mar 2020
Even experienced resellers sometime struggle with this fundamental question about selling their goods, “is the price right?”, this is the question you likely think about for each item you sell. Did I price the item too high or too low? Will I have to sit on the item for months or will it sell quickly at the expense of some extra margin that you could have made. It’s not an easy question to answer and there is simply no one right answer as there are many variables involved. So how is a reseller supposed to determine their pricing? This can be done with a little bit of research and planning so let’s tackle a few fundamentals of knowing how to price your merchandise and most importantly make a profit.
Understand your market- Where are you selling your merchandise? In a traditional retail storefront in your hometown? Or Is it all online via sites like Amazon, Poshmark or eBay? perhaps you do a little bit of all of these, but are all of these sales environments the same? No far from it, all are unique and draw a very different type of consumer. Online shoppers on eBay and Poshmark are most likely hunting for a deals, so expect some digital haggling and add some padding to allow for flexibility. Amazon and your traditional storefront? It’s a firm price however you may have to adjust down or up depending on the competition. In this scenario weigh the speed of the sale verses the margin and find your happy middle ground.
Find those comps- Online resellers make sure you are doing your homework on each new listing and you do this by finding comps. Ever sell your home and wonder how they came up with the price? They look at your home and its square footage then they look at other homes in your area and what they sold for to determine its value. It’s the same with reselling liquidated merchandise find the item or brand you are selling and look at pervious sales history on that particular sales platform. When looking at the sales history for a given item or brand it’s important that you are finding good comps. Don’t price your new with tags item too low by comparing it to the sales history for a previously owned item this is not an apples to apples view.
Have a strategy- Do you do a flat markup? across the board 25% margin on every item? Or perhaps you work on a slim 12-15% markup just to get high turnover cash flow going. Lots of resellers do a hybrid, low margins on cheap goods higher heathier margins on premium brands. The point is to have a strategy, you should know just how much margin you will make on any given sale it’s a fundamental to running a successful business.
Master your resellers skill’s gain an understanding of these pricing principles and never wonder again if the price is right.