Let’s talk about your options for pricing!
Look at any seller in eBay or Etsy, (go ahead, go pick a seller), and observe whether they are listing a lot of things or just a few things, and whether they’re selling their items for a high price or a low price compared to their peers.
Over time every seller chooses one of these 4 paths, there are just four. What are the 4 paths sellers can choose from?
It’s like the sign on that old country road,
‘pick your rut carefully, you’ll be in it for the next 20 miles’
1. Competitors that match your offerings and lower prices forcing you to compete on price or fail.
2. A strong temptation to lower prices to increase volume.
One of these is an external threat, the other an internal temptation. Both must be avoided if you’re going to become a high volume, high price seller. But even if you never become a high price, high volume seller, it’s often times better, in economic terms, to remain a high price, low volume seller, and just manage your brand and customer base carefully, (think Rolls Royce). How many high volume low-price stores can you think of that have horrible brands, and eventually go out of business? That happens more often than anything else.
It’s obvious that the best place to start is by selling at a high price. And of course, I’m not talking about absolute price, (like selling items over $10,000), I’m talking about relative price, (like 10 times your cost of goods). I’m talking about ensuring you start with a high margin item. And that you find a way to offer your goods at a premium price in your market. If there is tons of undifferentiated competition in your category, you won’t be able to do this, but if you’re niche is small enough to dominate, then you can position yourself as the premium brand.
Of course, you might be thinking, ‘how does running auctions fit into all of this? – because then I’m not setting my prices, the marketplace is doing that for me!’ Good point. In some ways, running an auction is like a democratic way of setting your pricing path. You let ‘the market’ help you find your way. If your designs, photography, and brand identity are all spot on, then the market will catapult you to the top of your niche. You’ll be a high priced seller. If something is off, then the market will penalize you for it. The great part is – once the ‘market’ has placed you into a high selling spot, then you can legitimately own that spot. It’s the strongest of all brand positions – a market reinforced statement of your pricing legitimacy.
Remember your pricing strategy is a reflection of your brand strategy. Price wisely.