More Hard Work Equals More Cash
Author: Bennie Gay
Author: Bennie GayWe have a big problem; all of our competition is selling their products for less than we are. This is causing us not to have any sales. We got ourselves into quite a bad situation; was there anything we could have done differently?
Things would not have been so bad if we would have done our research! Research is our best friend in business, and in this regard it is no different. Before we build a site, we want to see how our potential suppliers stack up compared to everyone else online. Now, if our retail price is the same or higher than our competitors wholesale price, we really have a problem.
Some people may wonder how a retail price could ever be the same as somebodies wholesale price that they have to pay their supplier. We'd talked previously about this phenomenon, and this is definitely one instance where we're seeing first-hand the effect this concept has with us and our business.
Since we can't really order inventory in large amounts to reduce our cost, we should research the effectiveness of our supplier(s) before we create our website. If we do all of this before we create our site, we can still change suppliers or even find an entirely new niche if we need to in order to be competitive.
Some websites will actually do this kind of thing for you. First and foremost we have the Google Product Search, a tool powered, aptly enough, by Google that will allow us to see what people are pricing our specific item on online, utilizing the power of the Google search engine to give us a very good picture into all the available products out there. You can also go to Froogle to see what the competition is pricing their products as. By doing this, you will be able to find out if you can compete with your competition or not.
I also like to use PriceGrabber as a major resource. This website functions quite the same way as Froogle, but it gives us a different system for pulling their results, which in turn gives us an even more complete view of what our competitors are doing.
Okay, so now how do we make all this information come together so that it makes more sense? So, we can tell what our competitors prices are; how great is that. How does this help us? Is the goal to try and have the lowest price out of everyone? Do we just want to see the highest price and price our items accordingly?
The point of it all is to find a price which is a happy median between too high and too low. Don't try to be the lowest price, you will possibly end up being under-cut or facing a company that has a supplier that gives them a better deal than you get. I suppose you could try to make it work out to have the lowest price out there, but good luck with that.
While you are bussy trying to figure out how to not be the lowest price out there, it is very important to not be the highest price either. If we're the highest, than it is quite probable that people will utilize many of the same tools that we use, in order to see that there are cheaper alternatives out there. The competition will most likely go with the cheaper alternative. It's because of this that we must find a price with high demand that falls between the highest and lowest.
However, this is not so simple a thing as seeing where our supplier's price is, and just gauging things that way. We want to make money so we need to do our best at finding a good price point. Typically a new business owner should try and shoot for a 30% profit margin, which roughly translates into a $15-$20 per item profit.
It may seem like a lot of work but, believe me, it's worth the sacrifice of time.About the Author:
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