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Pricing by Economies of Scale
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In addition to cost and demand considerations, you need to factor in economies of scale. Simply put, economies of scale occur when the cost involved in selling an item decreases with an increase in the quantity sold. This is particularly true for selling multiple quantities of an identical item in either a multiple item listing, fixed-price, or eBay Store listing. The eBay insertion fees for store inventory remain the same whether you re selling a quantity of 1 or 1000, so the larger the quantity listed, the lower your insertion fees will be per unit, thus allowing you to lower your overall price. Selling multiple quantities of a single item allows the seller to spread out the costs of insertion fees and makes additional fee-based enhancements like bold, gallery, and featured listings more affordable on a per-unit basis.
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Note: Use this strategy only with products that realize consistent prices
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on eBay historically. For goods with more volatile prices, you could risk losing profit if you saturate the market with too many of them. Multiple quantity listings also save you time and effort, which reduces your labor costs. It s much quicker to create one item listing, write one item description, and photograph one item to sell a quantity of 100 identical items than it is to create 100 different listings for 100 different items. It s also easier to ship a multiple quantity of identical items with the same box and packaging than to package up many different items in different sized boxes. Conversely, if you sell a variety of individually listed items, you ll need to be sure that your prices are high enough to cover the additional fees and labor-intensive nature of their sale.
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The Secret to Pricing Success Is to Test, Test, Test
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With these factors in mind, the most important element to creating a pricing strategy for eBay is trial and error, and then tracking your sales results. Test, test, and then test some more. Try selling the same item at a variety of prices to test what the market will bear. Does your sales volume increase if you lower your price Does the volume increase enough that you profit more than selling it at a higher price Or would you make more money if you raised the price, but sold less If you re going to use a multiple item pricing option for a large quantity of a particular item, run a few trial runs with a single unit at different prices to establish the best price to use when selling a large quantity. Try selling the same item at different times of the year, different days of the week, or even different times of the day. Continue to check other sellers prices and see how they ve priced their items and how quickly their items are selling at those
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prices. Browse around and see what products are generating the fierce bidding wars in the auction-style format.
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eBay businesses may wish to invest in price-tracking software or even retain the consulting services of pricing strategists. A number of books on pricing strategies for small businesses are available if you want to get really deep into this stuff. However, any eBay business can benefit from gathering data (via simple eBay searches) on the following factors: Number of like items currently for sale versus number of completed items. This gives you an idea whether the current number for sale is a little or a lot by comparison to previous weeks. It gives you a picture of the current supply on eBay at any given moment and helps you judge current demand for those goods. Prices of your competitors goods. Sort your search by highest price first so you get a clear picture of the ceiling of the going price of your goods. Also, open some of the high-price listings to examine the title, description, and category. This helps you determine why these listings edged out the competition for higher final prices. Pricing formats used by items garnering highest prices. Again, examine some of the winning listing auctions and determine whether using an auction-style listing format, Buy It Now, fixed-price, or eBay Store listing is best for your product. Your own sales history, including your total sales, quantity sold, as compared to your cost of selling the products. This gives you a good idea of your items with high versus low profit margins, as well as best-selling products versus items you may want to discontinue. Price fluctuations and seasonality. This gives you the larger picture of when to expect maximum demand for different products. Write down this information, or plug it into a spreadsheet and revisit it frequently. Gathering this data will help you formulate your own customized pricing strategy for each and every product you sell. You ll begin to know intimately the kind of profits you can consistently make on certain items or services. And you ll be able to note deviations (both positive and negative) from your expectations. You ll be able to pinpoint what marketers call price elasticity, or how your sales volume will shift with increases and decreases in your prices. You ll know when to use an auction-style listing format to maximize bidding and when to sell it quick with an enticing Buy-It-Now price. You ll gain more perspective on seasonality and trends and even days and times when high traffic on eBay yields better sales results. The key is to track
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your sales and pricing data through both your successes and failures. The process helps you develop a comprehensive understanding of your products price sensitivity.
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