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Don’t Be Afraid To Try Bigger Profit Margins…
Did you know that many people think that they have to have the cheapest price to be able to sell online?
This generally is not the case and can actually harm your long term growth.
That is, if there is another store trying to do the same thing you may just start a price war.
The problem with focusing on price is that you and your customers will get addicted to it. It means you leave easy money on the table and price cutting becomes your only tool to succeed.
At the end of the day, cutting prices generally achieves two things.
1. You attract a lower value customer.
2. You need to sell more to make money.
Instead you should focus on ease of ordering and customer satisfaction.
For those of you who don’t think there are decent margins I can give you a real life example.
I just completed an order for a shop we run for a pair of earrings they were sold for 33.58€ – around $37.50 USD
The cost to purchase + send this item was $4.56 USD (direct from Ali Express)
This order took a couple of minutes to process and had over a 700% mark-up.
If this store had focussed on price alone, we may have sold the products for just a 100% mark-up (which in most cases is still a huge return).
However if we sold it at just a 100% margin, we would have had to sell another 6 units just to make the same amount of profit.