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How to decide the price of your product - online sales


Competition is fierce in online sales.

Especially in third party selling platforms.

When you are a new seller, trying to sell other companies brands/unbranded products, profit margin becomes very low.

If you are an online seller, selling on platforms like Amazon, Flipkart or eBay, you have to consider many factors like chance of return, damage & more while calculating the cost of product.

How to decide the price of your product - online sales

How should you calculate the cost of product? Along with the price of product, you have to consider the cost of shipping, handling, taxes, returns, damages, platform fees, etc. and more.

So how about a formula to calculate the cost of product?

Cost of product for online sale = price of product + cost of shipping + cost of handling + cost of taxes + cost of returns(min 20% of shipping) + cost of damages(min 2% of product price) + cost of platform fees + cost of other expenses.

You should keep a spreadsheet file with all the costs, and calculate the cost of product for each product.

One example is given below.

Spreadsheet for calculate pricing of products for online sales

Before buying products for online sales, when the wholesaler/manufacturer tells you the price, you have to add all these costs and compare it with the price at which the product is sold by other sellers.

What if other sellers are selling the same product? At a price lower than your cost!

You also have to consider price at which others are selling the product.

This is a usual scenario. You can escape this situation only by finding unique products. Unique products are products that are not sold by other sellers.

Written on March 1, 2022
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