![\"Set](\"https:\/\/www.hostgator.com\/blog\/wp-content\/uploads\/2017\/01\/Set-pricing-for-your-online-store.png\")
<\/p>\n<\/p>\n
So many parts of starting a new business are exciting.<\/p>\n
You have dreams of wild success and enjoying the freedom of working for yourself.<\/span><\/p>\n But every business owner has to deal with one especially tricky problem: figuring out pricing<\/strong>.<\/span><\/p>\n Setting the pricing for items in your online store is one of the hardest parts of setting up a new business.<\/span><\/p>\n If your prices are too high, you\u2019ll lose sales. If they\u2019re too low, you won\u2019t make enough profit.<\/strong><\/span><\/p>\n Either way, your business faces a real possibility of failure.<\/span><\/p>\n Your success depends on getting this right, yet there\u2019s no clear right answer to what you should charge. \u00a0<\/span>Here are a number of steps you can take to make an informed decision when setting your pricing.<\/span><\/p>\n <\/p>\n Your list will likely\u00a0includes the cost of items such as:<\/p>\n -Inventory<\/span><\/p>\n -Any supplies needed to make the product you sell<\/span><\/p>\n -Various supplies needed to run your business ranging from higher-cost items like computers and furniture, to smaller items like pens and paper<\/span><\/p>\n Web hosting for your business website<\/a><\/span><\/p>\n -Designing your website (or hiring someone to do so)<\/span><\/p>\n -All your marketing efforts<\/span><\/p>\n -Any labor your hire including employees, contractors, and specialists like your accountant<\/span><\/p>\n Even if your business is relatively simple, your costs do add up and you need to be confident your pricing will help you make that money back (and then some).<\/span><\/p>\n <\/p>\n Just as you track your expenses, you should be tracking your time whenever you work on your business. You can find a number of free time-tracking tools, such as <\/span>Toggl<\/span><\/a> and <\/span>My Hours<\/span><\/a> that will help you gain a complete picture of how much time you\u2019re putting into this store.<\/span><\/p>\n Figure out two numbers:<\/p>\n 1. How much would you <\/span>like<\/span><\/i> to be paid for your time if you\u2019re being ambitious?<\/span><\/p>\n 2. What\u2019s the bare minimum you feel you <\/span>need<\/span><\/i> to be paid for your time for this business to pay off?<\/span><\/p>\n That range will help you clarify how much your business needs to make for you to be happy with the profits you earn for the amount of work you put in.<\/p>\n <\/p>\n The first two steps make it easy to think big and might make you inclined to price high, but this is the step where you have to figure out what\u2019s realistic in your industry. Spend some time browsing the websites of people selling similar products. Think like a customer: do searches for the terms they\u2019re most likely to use to find products like yours and check out what\u2019s typical on the websites that show up first.<\/span><\/p>\n Record what you find as you go in a spreadsheet so you can better see the trends in pricing in your industry and track how prices vary across products with different sets of features. \u00a0At the end of this exercise, you should have a good range in mind. \u00a0You want to know both the low and high ends of pricing in your industry, and have an idea of what\u2019s different about the brands that charge prices on the higher end.<\/span><\/p>\n <\/p>\n If seeing what businesses were charging on the low end of your range in step three was disheartening, don\u2019t let it get to you. \u00a0You can go higher than your competitors if you can figure out what makes your business or product special.<\/span><\/p>\n Whether it\u2019s because your products look better, last longer, or work better in some key way, if you can find the thing that differentiates what you\u2019re selling from the low-end options out there, then you can convince customers it\u2019s worth paying more when they buy from you. A marketing consultant can help you with this step if you\u2019re having a hard time on your own. It\u2019s part of their job to help clients figure out clear brand positioning.<\/span><\/p>\n <\/p>\n Shipping costs are an inevitable part of online business. People hate paying for shipping and the added expense immediately makes your products look more expensive. In <\/span>one survey by UPS<\/span><\/a>, 44% of customers said they\u2019ve abandoned an online purchase because of high shipping costs.<\/span><\/p>\n 44% of customers said they\u2019ve abandoned an online purchase because of high shipping costs. #ecommerce <\/a><\/span>Click To Tweet<\/a><\/span><\/p>\n Option A:<\/strong> You can stick with passing the cost of shipping onto your customers. Many businesses do this, but you increase the chances of shopping cart abandonment. <\/span><\/p>\n Option B:<\/strong> You can offer a flat fee for all shipping say something like $5 so it doesn\u2019t look too high to customers, but also means you\u2019re not having to cover the full costs of shipping yourself.<\/span><\/p>\n Option C:<\/strong> You can offer free shipping for orders over a certain amount. This is becoming an increasingly common option businesses offer as it encourages customers to spend more, so while you do have to pay more in shipping costs, you end up making\u00a0more on the order as a whole. <\/span><\/p>\n Option D:<\/strong> You can offer free shipping on all orders and raise your prices to account for the difference. The main risk here is that your products will look more expensive at a glance, which could drive customers away.<\/span><\/p>\n Any one of these options can work and you could potentially try out different ones over time to see what gets the best results. Having a clear idea of how you\u2019re going to handle shipping is important as you reach your final step.<\/span><\/p>\n <\/p>\n Even all your prior research won\u2019t make this step easy, per say, but it will give you the information you need to make an informed decision. At this point, you just have to do it. \u00a0<\/span><\/p>\n Set pricing that falls within the range of what you found your competitors charging, while being high enough to cover your expenses and allow for some healthy profits besides. Make sure the prices are high enough to leave some room for discounts and specials. You don\u2019t want to lose money when great sales opportunities like Black Friday<\/a> roll around. \u00a0<\/span><\/p>\n![\"HostGator](\"https:\/\/www.hostgator.com\/blog\/wp-content\/uploads\/2016\/10\/HostGator-Website-Builder.png\")
<\/a><\/p>\nStep 1: Consider your business costs.<\/h2>\n
![\"Consider](\"https:\/\/www.hostgator.com\/blog\/wp-content\/uploads\/2017\/01\/HostGator_Blog1-office-supplies.png\")
Every business has expenses. Your pricing needs to account for the amount you\u2019re paying into the business if you ever want to make a profit. Hopefully you\u2019ve been tracking your expenses as you go and have a fairly clear idea of the budget you\u2019ll need moving forward. If not, then your first step needs to be tallying up all your costs so far and those you expect to take on in the near future.<\/span><\/p>\nStep 2: Consider your time.<\/h2>\n
\n![\"Cost](\"https:\/\/www.hostgator.com\/blog\/wp-content\/uploads\/2017\/01\/HostGator_Blog1-timetracking.png\"){kind=tracking}
In the early days when you\u2019re just getting set up, you likely won\u2019t be making anything back for that time, but eventually you need to for the effort to be worth it. Your pricing therefore needs to consider your labor, as well as your costs. <\/span><\/p>\nStep 3: Research your competitor\u2019s prices.<\/h2>\n
Step 4: Figure out your unique positioning.<\/h2>\n
Step 5: Consider shipping.<\/h2>\n
![\"Cost](\"https:\/\/www.hostgator.com\/blog\/wp-content\/uploads\/2017\/01\/HostGator_Blog1-shipping.png\")
You have a few options here:<\/span><\/p>\nStep 6: Set your prices.<\/h2>\n