Top E-Commerce Questions: How Do I Decide a Price for My Product?

How Do I Decide a Price for My Product?

Pricing is a tough decision for online business owners.

Do you opt for lower prices to beat competitors in your e-commerce niche?  Do you double the rate your wholesale supplier charges you and add enough to cover your shipping costs? With a variety of pricing options available and numerous factors to consider, learning how to decide how much to charge for your e-commerce products can be confusing. 

When you want help deciding on an e-commerce pricing formula, consider the following online business tips:

Profit Based Pricing

One way to determine your e-commerce pricing structure is to figure out how much profit you want to earn on each product you sell.

To calculate your profit based pricing -- understand your cost of goods, determine a price for your labor, and figure out how much extra time you put into business-related tasks for your e-commerce company (marketing, customer acquisition, accounting, etc.). 

Once you know these figures, you can then add on enough to cover the profit margin you want on each product.

Discount Based Pricing

Another factor influencing your e-commerce pricing structure is whether you plan to offer special discounts to your customers.

Offering free shipping or buy-one-get-one-free discounts can significantly impact the rates you charge for items in your online store.

Once you know how much these promotions cost you per item, you can then arrive at a price sufficient enough to create a profit for your online business.

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Value Based Pricing

Some online business owners opt for value based pricing when determining how much to charge for their e-commerce products.

  • Do you bring special skills to the table others in your market niche don't have?
  • Do you have university degrees relevant to your industry?

The more skills and talents you have as an online entrepreneur, the more you can potentially charge for your products based upon your skill sets.

The main challenge to consider with value based pricing is that just because you think you can charge extra for your e-commerce items based upon your inherent value, that doesn't mean customers will be willing to pay a premium for your product offerings.

Check out the video below to see Evan Carmichael go into the logic behind value based pricing:

Software Based Pricing (Algorithmic Pricing)

Some e-commerce merchants choose to not determine their own product prices and instead rely on pricing software.

Opting for pricing software takes the worry out of your hands over what to charge for your e-commerce products.

While pricing software might be an option to consider if you are new to the e-commerce game, it should be considered a tool and not a 'written in stone' mandate for your product pricing.

Only you can know whether you're comfortable with the prices you're charging for your products and whether you're happy with the profit you're making on each e-commerce sale.

Read more for your e-commerce edgeBest Practices for Unboxing Videos

Tier Based Pricing

Pricing tiers are yet another option to consider for your online business.

Some e-commerce merchants offer a beginner, intermediate, and premium pricing structure.

Tiered pricing works especially well for subscription-based e-commerce merchants, allowing you to add extra features and benefits to your higher-tiered product/service offerings.

E-commerce pricing tiers are an excellent way to attract customers at lower tiers and then make your higher tiered products so irresistible customers can't resist upgrading.

Wrapping Up

When you are asking yourself "How do I decide a price for my products?" it might be time to contemplate everything that goes into running an e-commerce store and how much your time is worth.

Once you realize that everything from social media marketing to uploading new products to your store has a cost factor attached, you are in a better position to determine the best prices for your e-commerce products. 

Optimize Your Shipping Cost with Fulfillment Bridge

Shipping costs can make or break your e-commerce success. Your logistics and fulfillment can be your e-commerce edge, especially when you can ship worldwide and take full advantage of the global marketplace. Fulfillment Bridge can lower your shipping cost, decrease shipping hassles and enable new markets for you. 


When you are ready to take your ecommerce shipping and fulfillment to the next level, contact Fulfillment Bridge

Kais Khadhraoui
Kais Khadhraoui
I'm the CEO & Founder at Fulfillment Bridge. I spent more than 12 years providing cutting edge financial solutions to global banks and stock exchanges and running successfully Multimillions projects at global scale. I decided 8 years ago to start my entrepreneurial adventure in the eCommerce industry. I discovered similarities in both fields which made it easier for me to provide high quality eCommerce related services inspired from the Fintech world. My ultimate goal is to create a leading eCommerce solution following the high standards adopted in the financial industry. When you are looking to take your ecommerce to the next level and partner with a logistics provider that specializes in global ecommerce solutions, you can get in touch with me on LinkedIn.