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Pricing Strategies for your eBay Store

By: Dave Howell - Updated: 11 Jul 2010 | comments*Discuss
Ebay Pricing Business Finances Market

Just like any E-commerce business your ebay store must make a profit. The finances of your business will be dramatically affected if you can understand the market your business is selling to, and price the goods on your ebay store accordingly. Whether you use the auction format, the Buy It Now feature or a combination, your market research is invaluable to ensure that the vast majority of the items you list on ebay sell first time, and make the amount of money you need to keep your business profitable.

Covering your Costs

The type of store your business opens on ebay will have a major impact on your costs. If you are listing just a few items, your store will be free to run, but as your business grows, costs also increase. An Anchor store on ebay would cost your business £350 a month to keep open, which is a major cost to consider within the finances of your business.

If you also use ebay management tools such as Selling Manager Pro, these too have a monthly cost you have to consider. Lastly, using PayPal as the payment mechanism for your business will mean you have to pay a fee for each transaction. These fees can fast mount up and become a major cost to your business. Look closely at your business costs as you need to factor these into your overall finances as these costs will ultimately determine what you have to charge for the goods your business sells.

Buy It Now

You may decide that using the auction set-up on ebay doesn’t suit your business. Ebay realised this some years ago and began to allow sellers to put items for sale on their ebay listings and stores with a fixed price ebay called But It Now. The Buy It Now feature is a good alternative if you have a fixed price you want to charge for goods your business sells. Market research will determine what this price should be.

A new addition to the Buy It Now feature is also available that enables your business to negotiate with a potential buyer on the amount of money they are willing to pay for the item your business has for sale. The Best Offer feature gives your business more flexibility in its pricing and can mean your business makes a sale where a lot may not have sold with a traditional auction.

Low Start Option

Many auction lots on ebay have a low starting bid price - often just 99p. What many sellers found was that their auctions were finishing with a winning bid below the minimum they needed to make in profit to keep their business operating. This is where putting a reserve price on your low start items can help.

The goods in on your business pages will not sell until they have reached the reserve you have set. This enables your business to track its finances and remain profitable. Remember, though, that there is a reserve price fee that you must factor into pricing to ensure you make a profit on each auction your business lists. Many ebay users do not bid on items with reserve prices.

Listing Cost Strategy

To run your ebay business profitably you need to think carefully about what price you start your auctions at, and what price you think your auctions will finally reach. Both of these figures are important because ebay has a sliding scale of starting price charges and final price charges. If you look closely at the fees charged by ebay you’ll see you also have to factor in the type of goods your business is selling. There are a number of pricing strategies you could adopt:

Reduce your Starting Price
If for instance your starting price is £101 pounds, if you reduced this to £99 you would save your business 30p on each item listed. If your business will list multiple items at once, this can mean a massive cost saving over time.

No Reserve
Also think about the additional cost of placing a reserve on your items. Do you really need to do that? Your market research should tell your business what bidders are likely to pay, so listing your goods close to what you expect them to finally sell for avoids the reserve fee entirely.

Lowest Starting Price
A high risk strategy is to always list your items with the lowest starting price. Currently this is 99p. Your business must be sure that the item will climb to the final selling price you need to make a profit. Your market research should indicate which items can be sold using this risky pricing strategy.

Include Delivery Charges
Most of the customers to your ebay business will hate delivery charges that are added to their order at the end of the auction, or when they click the Buy It Now button. Your business could offer free shipping of course, but a better strategy is to build your shipping charges into the starting price of your auctions, or Buy It Now price.

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