As a reseller, pricing items for sale is the backbone of your business. It is a delicate process to price your item in the sweet spot. The sweet spot is the perfect price where you come away with the profit margin you need, and the buyer feels like they scored a deal! Read on for strategies to increase sales and buyer satisfaction.
Assess Comparable Items (Comps) On The Marketplaces
First, see what the current availability is on the marketplace to scope out pricing (and if the item is oversaturated in your size/color). A saturated item may force you to list at a lower price to be competitive (or, if you’re purchasing it at the thrift, you may want to hold off on that purchase).
Next, filter to the “sold” category and see what price the item has sold at historically. This is the most important piece in pricing strategy. You may see many available listings with a price of $60, but if the item has consistently sold for $30, it is much more realistic that you will be able to sell for the $30 price tag.
Calculate Your Profit Margin
The second step is to run some numbers to ensure the item will be profitable to you while also being competitive in the marketplaces. I have seen resellers go about this two different ways:
- Dollar amount profit per item
- For example, setting a guideline where you must make $15 per sale
- Percent profit margin
- For example, a 50% profit margin for items sold
These numbers for your business can vary though, as resellers find some good bread and butter brands that can make a quick sale, even if it sells for below the dollar amount you expect or the percent profit margin.
Your expected profit margin is definitely easier to control when you are thrifting or purchasing items to sell through online arbitrage, as you can check comparables (comps) and make an informed decision before purchasing the item. However, mystery boxes and wholesale are both still a great option if you have included that as a part of your reselling business!
Additionally, your profit can bend as inventory gets stale and you would just like to move the items out to make room for new and better finds. This timeline is totally up to you and your business model.
After all, nothing is guaranteed on the resale market - and every purchase is a learning experience! Just continue to improve your craft and improve your informed purchasing of inventory.
Combine Comps and Profit Margin
Following your market research and calculating your bottom line for the item, there are two ways you could go:
- Price your item the same as or higher than other similar/identical items
- This allows you some flexibility to send and receive offers on your item if you’re listing your item 10%-30% above the lowest price you can accept
- You can always lower the price and relist later if you don’t have any takers on your first price
- The other listings with lower prices may be more enticing to buyers, and they may skip over yours
- Price your item the same or lower than other similar/identical items
- Buyers eyes will likely gravitate to your item since it is the best deal on the market
- May make for a quick sale and return of money into your business
- There may not be room for sending or accepting offers which may significantly limit sales (for me personally - over 50% of my sales are from offers!)
However- what if you found a super unique item that you can’t find on any platform?! This will require you to do some research. Technically, you can set the stage for pricing because you are the only one out there.
However, it would still be beneficial to perform research on the marketplace and see if you can find what the item has sold for prior and what the item retails for in order to set an informed price.
As with all aspects of resale, there is no one right way to do something. It all depends on the structure of your business and the guidelines you have set forth!
You have to choose the route that works best for your business model. If you’re new, experiment with both strategies and see what works best.
What pricing strategies do you use for your reselling business?