Wednesday, November 30, 2016

Turnover Tuesdays - Pricing for the 4th Quarter Madness

For those who are not familiar, I started a series a while back called Turnover Tuesdays. Every Tuesday I like to highlight one item that I have resold. This will include profitable and non profitable sales. I hope that there is always something to learn.

The previous posts in the series can be found at the bottom of this post.

Pricing During Q4 Busy Season

I'm going to officially declare that we have reached the Q4 busy season.  While things will probably still heat up a bit more in December, from talking to others and my own sales figures, overall sales are way up from even the beginning of last week.

As I mentioned a few weeks ago, I'm even selling items that haven't come close to hitting my price in almost a year.

My Quarter 4 pricing strategy is radically different from the rest of the year.  During the rest of the year, there are significant risks associated with raising your price too high.

You are more likely to have a return, either because someone notices the significant price change from another retailer or because it's just more money.  Someone may chalk up $20 to an annoying experience but may not be worth the time and hassle of the return.  For $30, they might be more likely to return.

In addition, you have the risk of never selling (or paying extra storage fees) if the price doesn't ever make it to you.

Even if you sell you may be inviting unwanted competition.  Every time someone scans that item or finds it online and compares it to Amazon, it looks a lot more enticing.  You may be better off with more sales at a lower price with less competition, than bringing in more competition.

The last risk is that you may not sell at all even if no one finds it.  It may just be too expensive.  I've seen 10 oz bags of popcorn selling for $60 and looking at Keepa, the rank kept getting worse.  People aren't intelligent and my business model depends on that but to think someone might buy popcorn for $60 is not a wise choice.

When it comes to quarter 4, some of those risks, but not all, still exist.  You may be more likely to have a return.  You may price too high even for gift givers and you may be inviting competition but that's not usually a factor.

I have found that it is tough to price too high to invite competition since the window is so small but definitely not impossible.

My 4th Quarter Pricing Strategy

This strategy only applies to this part of the 4th quarter (past black friday) and items that are 4th quarter related.  If you are selling regular cheerios, I don't expect much of a bump for 4th quarter, you can keep your prices the same.

I have too many units to constantly monitor prices on everything.

When I send items in, I price 20% to 30% higher than the current buy box (possibly more if there is little competition).

I am constantly checking my pending orders for sales.  As items sell I check competition and increase prices on almost everything.  You would be surprised how quickly things get back to your new prices.  Sometimes even the same day.  Don't think this doesn't matter, a couple of percent goes a long way  If you are selling $100,000 worth of stuff in the fourth quarter, 2% is $2,000 extra dollars minus fees in your pocket.  That can be a big deal.  There is one one toy that I was selling for $35 a few days ago, and now I'm up to $65 after a few raises.  Obviously, most are not going to be so dramatic but the point is that you can raise and do quite well.  Otherwise you come back to the listing and kick yourself when it goes up $5 in 2 days

Here are a few examples of few units in action

You can see that in a two day span I increased my price from $13.99 to $16.99 and thereby changed my ROI from 57% to over 160%.  That's nothing to sneeze at.  Since then my price has increase to over $19 a unit which has been selling as well.

You can see from this one that I was a little slow on the trigger to raise.  I sold a few at the same price but then a raised $2 and then almost another $5.  You can see that my ROI increased from 31 to 45 to 78%.  That's a big deal.  The only problem is that I'm kicking myself because it's only a few sellers until $40 and I'm out of stock.  Grrr!

Bottom line is watch your prices carefully, if you do, you may end up with a quite a bit extra money in your pocket.  Happy selling!

Week 64 - The Buy Box
Week 65 - Amazon Restrictions and the Future of Selling on Amazon
Week 66 - Fun with Inventory Reimbursements
Week 67 - Q4 Storage Fees
Week 68 - Start Your Own Listings
Week 69 - A Long Tail Sale and Calculating Storage Fees
Week 70  - Prices Always Come Back Except When They Don't
Week 71 - Past Performance is No Guarantee of Future Results
Week 72 - Automation Beyond Amazon
Week 73 - Some Quick Holiday Tips
Week 74 - Update on Miles vs. Cashback Opportunity Costs