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a charity here. You need to be sure that you are going to earn money for your own time and effort.
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Some sellers use their costs as the exclusive factor that drives their pricing decisions. This strategy is called cost-plus pricing. It takes the cost of goods sold and adds a percentage or flat-rate markup for profit to determine the final price. Despite the fact that many sellers use this pricing strategy, some inherent flaws exist in the cost-plus scheme. First, it assumes that you are going to sell all of the units on which you ve based your price. If you end up selling less than expected, your profits will diminish exponentially. Second, cost-plus pricing also doesn t account for the possibility that customers may be willing to pay more for your product than the price you ve set. For example, if you determine a fixed price of $10 for your item, but eBay customers would actually be willing to pay $20, you re missing the opportunity to make an additional $10 per unit. This is where it becomes important to have a full understanding of the price that the eBay market will bear for your goods and incorporate it into your pricing strategy.
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One of the amazing things about eBay is that it s nearly a pure market economy. With competition between bidders setting the prices on auctionstyle listings, and with the buyer s ease of comparison shopping for fixed priced items, the concepts of supply and demand are alive and well on eBay. This can make pricing on eBay a tricky endeavor. What sells for one price on a Tuesday night might sell for significantly more the following Sunday afternoon. It s a function of the number of interested buyers and the number of identical or similar items available at any given time. If the eBay market is flooded with tons of a particular item, it likely won t command premium prices. If the item is fairly rare, the bidding will often drive the price higher.
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Note: We ll discuss scarcity and how to leverage it in 5.
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Customer desires play a major role in setting prices by demand. Hotterthan-hot consumer goods are often in short supply in traditional markets, and sellers who carry these coveted items on eBay will command higher than retail prices. Apple iPods are a great example of this phenomenon. The iPod minis, in particular, command higher than retail prices on eBay (last we checked but by the time this book goes to print, a new product will likely be kicking off bidding frenzies). Conversely, sometimes uncommon or one-of-a-kind items won t garner bidding wars if nobody wants them. Let s say you re selling granny s hand-knit toe warmers. The price will likely still remain low, because really, who is going to buy granny s hand-knit toe warmers anyway To make an informed assessment of the going price for your items on eBay, you need to do a little homework. Take some time to peruse the site, doing keyword searches and browsing the specific categories for other items similar to what you sell. Be sure to do searches of completed items to get the final gavel price on an item, as sometimes bidding will drive the price of hardto-find items much higher than you might expect. Conversely, items with BuyIt-Now or reserve prices that are too high won t sell at all, and that s not really an accurate picture of the market price for that item. Prices on eBay fluctuate constantly. That s just the nature of auctions you can never predict exactly what price your item will sell for. You may end up delighted or you may end up deflated. Buy-It-Now, fixed-price sales, reserve price listing auctions these different pricing strategies allow sellers to capitalize on the ever-changing marketplace. But even with all these options, the final price of your sale (or whether or not it sells at your fixed price) is still a function of what the eBay market will bear. Keeping a vigilant eye on the going prices for your goods on eBay will help you maximize the amount that you charge for your fixed-priced items, and this will give you a good idea of the prices to expect from auction-style listing sales.
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