The Importance of Price

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When a buyer decides that they want to buy something, the first thing that comes into the decision is money. They have already decided how much they want to pay before they have even searched for the item. This is important information, because it allows us to predict their next move. The customer will have done an eBay search for their desired item and will have arranged their search results in order of increasing price. Nobody is interested in buying a pair of shoes for £30 when they can get them for £20. Your product needs to be at the top of their search results, and the only way you're going to achieve this is to offer the lowest price.

Whenever you're selling an item, you should always search for it yourself on eBay and find out what the current lowest price is from other sellers. If you have set a 'Buy It Now' price which is higher than another seller, then YOUR ITEM WILL NOT SELL..... It's as simple as that.... Auctions are a little bit different because the final sale price remains uncertain until the end and this encourages people to try and get items cheaply... but if you are offering fixed prices only then always remember to do your homework on other sellers first. 

For all items, you need to add up:

Item Cost    +    eBay Fees (10%)    +    Paypal Fees (3.4%)     +    Postage Materials    +    Shipping Costs

Your BUY IT NOW price must be greater than or equal to this amount for you to break even or make a profit. If your total amount is more than the BUY IT NOW offered by another seller, then you cannot compete with them. Your only choices will be to either sell the item at a loss, or don't sell it at all. 


John is selling a new pair of Jeans. They cost him £10 and he wants to sell them for £15. The large envelope to post them in costs £0.65 and the postage is £3.00. eBay will charge him 10% on his final sale price, and PayPal will charge him 3.4%.

John needs to sell the ball for at least:

Item Cost      +      eBay Fees (10%)      +      Paypal Fees (3.4%)       +      Postage Materials      +      Shipping Costs
     £10          +     £1.50 (10% of £15)    +       £0.51 (3.4% of £15)     +                 £0.65               +             £3.00

Total =  £15.66

John therefore needs to increase his asking price to prevent him making a loss. However, another seller is offering the same Jeans in new condition and is also selling them for £15. This presents the following dilemma. John wants to compete with this seller but he is unable to match the other seller's price without losing money. He must therefore either abandon the sale of the shirt and admit defeat, or find innovative ways to reduce his costs. The eBay / PayPal percentages are fixed and he can't change these. As this is a one off purchase and he is not using a supplier,  he can't change what he paid for the shirt. That money has already been spent. So, that only leaves Postage Materials and Shipping Costs. Unless John can reduce the price of his envelope and postage, he will not be able to make this sale profitably.

However, if John is happy to lose some money and buy himself some positive feedback then he COULD sell the shirt for £14.99 and incur a loss of £0.67. He might wish to do this because he wants to clear out his bedroom and does not mind paying for that. Aside from needing a clear-out, there are also times when him making feedback will be more important than him making money...... Whether or not he should care more about profit or feedback is a judgement call, and again it depends on the situation, and what his objectives are. 

In summary, always know your total costs for selling each item, and do not underestimate the importance of offering the lowest price. If you can't match or beat another seller's price without making a loss, then its time to think about selling something else.

Brighter Bargains
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