April 2, 2020
How to price your products when selling on multiple platforms Amazon Ebay Etsy

How to price your products when selling on multiple platforms Amazon Ebay Etsy

– [Damian] Hey guys, this is Damian from Marketing Food Online. I’ve got a video today that I’m actually going to be responding to another question from one of my subscribers. I do enjoy doing these types of videos because, as I’ve mentioned before when I get a question from one subscriber there’s usually about a dozen or so other subscribers and people who are actually looking for an answer
to the similar question. So, opposed to actually just going ahead and answering it I want to just do a video on it and cover this question. And so I get a chance to answer it for as many people as I possibly can. And it’s actually a question, believe it or not, that I get a lot. I get a lot of emails
about this specific topic. I think I’ve done maybe two videos, maybe three videos on this topic before. But I wanted to go over really quick, a couple of different methods and a couple of different ways that you can come up with a
price point for your product. But do keep in mind, all of the information
I’m about to tell you has a lot of variables, and I’ll explain what I mean by that. The old fashioned way, before having e-commerce
and having businesses online you basically, let’s say you
have a product you created. It cost you a certain amount
of money to create it, right? So you wanna take it and you wanna sell it to a retail store. This was before the
e-commerce took off online and before businesses sold products like on Amazon or using
a third party platform, selling it on Etsy and eBay. So you produce a product. You have a little bit of a margin in there and you sell it to a retailer. But you have to sell it to the retailer at a low enough price that the retailer then can mark up the wholesale price that you gave them. So they can make some money too because that’s what they’re
in the business for. So that scenario is kind
of a really simplistic way of how business used to be. Now that you are producing a food product or any product for that matter. It doesn’t matter if
it’s food product or not. But let’s say you are making a, let’s just say a cookie, okay? And you have a set amount of
ingredients for that cookie and it cost you a set amount
of money to produce it. But now you’re selling on Amazon, eBay, Etsy, you know what I mean? You’re going online and you’re beginning to sell it through another platform but that platform is charging you fees to sell it to your customer, who’s going to buy it
through that platform, okay? Hopefully that makes sense. But there’s a lot of
variables involved in that. And the reason why I say that is that when you make a product it’s gonna cost you a set amount of money. I’ve said that already. You go to Amazon now, you’re
gonna post that on Amazon. Amazon has a certain amount of fees, okay? And it’s gonna be based on a handful, variety of variables that come into play. And also then at that point, are you gonna offer free shipping? Or are you gonna charge your customers? Because if you offer free shipping then you gotta keep in mind that that overall price that you’re
charging the customer, your shipping costs
are then gonna come out of that amount too. So I’m gonna go over about four or five different ways that you can
really calculate a price. But keep in mind that there’s
a lot of variables involved. And unless you have a preset methodology, if you will, of how you’re
going to ship your product, if you’re going to charge
your customers or not, the shipping aspect is something that a lot of times you may not think of especially if you’re new to e-commerce or if you’re new to doing business online you may not think about what it costs for you to ship it to your customer. Because that’s gonna come
out of your bottom line for that specific transaction. So let me get into that really quick. So pricing when you’re selling online. It is a different ballgame when you’re doing business online and
you’re doing it yourself and you’re utilizing Etsy, eBay, or even your own website for that matter. Because then you do have
a payment processor. And that payment processor
has a fee as well. So there’s a lot of variables
that come into play. So let’s just start with Amazon. So you go online. You create a product. You have a store on Amazon. Now what do you do? You wanna make a profit, obviously, with that product that you’re making but you can’t charge $100 for a bag of potato chips that you make. That just doesn’t make sense. Now you can make bundles and you can make groups of products. And you’re putting
multiple products together, which can increase the price point which I always recommend that you do but how do you figure out
what you’re going to make after everybody gets their cut? And then you gotta ship the product. Now there’s two ways that you can do this. Actually there’s three, there’s three. First off, if you make a specific product, you can go on to Amazon
and you can look up, what does the competition? What do people who sell a like item, they may not sell the exact
item that you’re making. Because maybe you either
packaged it a little differently, either a larger bag or a larger container. Or maybe you offered it in a flavor that nobody else makes. Or maybe you offer it with an
accompanying other product. So if you make a jar of seasoned nuts and then you offer some gummy bears, just as a snack mix as a combination of the two. Obviously there may not be a
lot of sellers that have that. But there are a lot of sellers that sell mixed nuts that are seasoned and have them packaged in a certain size. And then you also have a lot of people selling gummy bears, gummy worms, and those types of snacks. So you can go on and find out, what do they sell them individually for? And then you’re gonna bring them together and you wanna know what would
be the total retail price if you sold the two together. So I’m gonna just do an example on the board really quick. So let’s just say you went online and
you’re selling on Amazon. Now the two items that
you want to put together they have a retail price point, let’s make this easy, of $20, correct? So they sell it for 20 bucks. Now you’re making those two products. This is where the variable comes in and this is where it’s a little tricky. You still find your price point but keep in mind the different things that come into play. Now the guy that’s
selling these two up here he’s just buying them and reselling them. He buys each one for three dollars. And he’s six dollars into it, okay? But he didn’t make it
he’s just reselling them. So he’s got six dollars invested in it but here’s the variable. He has no time invested in it. The only time that he has
is the packaging of it and shipping it out to the customer. He could buy the two items, bring it into his facility, put it on a shelf, sell them on Amazon. And then when he sells it, he takes it and puts
it in a package, a box, and then he ships it. Now if you’re making a product, which a lot of my viewers as you know, I’m trying to teach you guys how to actually make
your own food products. Now you have not only ingredients, you have money invested in ingredients but now you have time. So you have to factor in how long does it take for you to make those two items? Again, this is just an example. So this guy spends no time but he has six bucks invested in it. Now you’re gonna make it. But you can make it for three dollars. So for three bucks you can produce the same two items. Put them together and
bundle them and sell them. But now you have to factor in, well it took you 30 minutes to make it. So this is where the trick is. How much time, or better yet, how much money do you wanna pay yourself for producing a product that
takes 30 minutes of your time? So the retail value of it is 20 bucks. Now out of $20 you sell it. Well you gotta pay
Amazon their percentage. So 20 bucks, and for this example I’m not gonna get into
all the technicalities of the specific percentages, all the percentages off
because it’s enormous. For the different categories, the different sizes, the price point. I’m gonna make it really
easy for the example. 20 bucks it retails. And let’s say Amazon takes 10%. So 10%, they’re gonna take two bucks. You’re gonna try to sell as much of this product as you can so you’re offering your
customers free shipping. So your customer’s not paying
you anything more than $20. So now you have to ship the product. And let’s say your shipping
cost you five bucks. So now Amazon takes out their cut of $2, now you have to ship it that’s five. So now you’ve taken $7 off the top. What you haven’t accounted
for is your ingredients, yet. And back up here we say
we can make those for $3. So now you gotta take off
another three bucks off of that. So now, two, five, and three is 10. So now, 50% of your retail
price point is gone already. So it cost you $3 to make it, $2 in a fee, and then you have to ship it. So now what’s left over is 10 bucks. So now from that you have to remember that now you take from that $10, you’re gonna have to
reproduce the product again. So it costs you three bucks to make your next one that you wanna sell. Because you obviously
wanna stay in business and that’s how you make your product. So it costs you three bucks to produce it. That’s for your next one. So now you’re walking
away with seven bucks. So out of a 30 minute time span. Let’s say it took you
30 minutes to produce this one product that sells for $20. The fee is 10%, which takes out two. Then you gotta ship it and then you got your ingredients and then you have the product ingredients for your next product. Because you gotta have
the margins for that. So you take $7. So in 30 minutes time you’ve made $7. And that’s for producing
those two individual products that you bring together. So this is one methodology, one method of actually figuring out what you want to charge for your products. Because you gotta also keep
yourself within the guidelines, within the measurements if you will, if you wanna use that term, of what is it that your
competition’s selling it for? So if you’re making a product for $3 and people are selling it for 10, you’re not gonna sell yours for 20 because nobody’s gonna buy it. So you gotta keep it within that mark. This is where, when I started my business, my food business, now that we have over
400 items that we make, it became very tricky at first to figure out how am
I gonna make a profit? How do I price this stuff? And now I figured out there is a way, there’s a method that we actually use to make the product, which cuts down on the time, so I don’t have to sit
there and calculate. I’m gonna spend 10 minutes
on a product to produce it and I wanna pay myself $15. But then that product,
that thing over there takes only five minutes and this takes only two minutes, so I’m getting confusing. So now I’m at a point where
I kind of use competition, and competitors price points. And whether they make it or not, it doesn’t matter to me. Because I know that when
I produce a product now, now that I know what it costs to make all of the items that I make now I know that the margin is perfect. The margin is where it needs to be. We have some products that
are hugely profitable. And to be honest with you, we have some products that I put up that I don’t even make any money on. I break even. And there’s a reason behind that. And I won’t get into that in this video. I’ll have to do another
video on that reason. But there’s some stuff
that I break even on and I’m totally fine with that. Because some of the stuff that we produce, the margin’s are anywhere from 37% to 42% and it’s just astronomical. But again, a lot of my customers like on Amazon and eBay, these customers purchase I had a lady a few days ago that purchased 400 pretzel rods. And the order itself was
literally almost $800 for one transaction. And our margins on that
specific product are very high. And I’m not telling you that
just to brag or something. I’m just telling you that, when you produce a product, keep in mind that it’s better off to have a line of products, a handful of stuff instead of just one. Because you can make a
lot of money over here on this specific product. And you could turn out a
ton of product over here that you may just break even on. But again, it allows
you to sell in multiple, tons of product. And you get out more and more products to more and more customers. And then those customers come back and end up spending a
lot of the high ticket, high margin items. So it’s something that’s
worked good for us and I’m gonna stick with it. So now that is just an example for Amazon. So again, if you are going on eBay too, the same calculations, the same method I was using over here can be applied to eBay. Where the variable comes in, and just keep this in mind, Etsy, eBay, and Amazon have
different types of fees. That’s the trick to it. You have to understand the fees. And to throw another aspect into it, is if you begin to use FBA. If you use FBA, that’s
a whole other ballgame. Because then you’re producing a product, you’re shipping it,
costs you money, right? Shipping it to FBA. Shipping it to Amazon. Then Amazon warehouses it. Then Amazon fulfills your order. Then they have fulfillment fees. Now those are different
than just seller fees. When you’re selling it
directly to yourself. And seller fulfilled orders are a whole different fee schedule. So that’s where the variable comes in. That’s what I meant earlier, when I first started talking on the video. Bottom line is there is no clear cut, one specific method that will work for all these different platforms. It used to be that way. When you just sold to a retailer you could either use a
distributor or a wholesaler. You have a wholesale price where you say, “Hey 20% off of the retail.” That’s flat, done, finished, easy to go. It’s not like that when
you’re using a platform to sell your products on. It’s a different ball game. So keep this in mind. Don’t get discouraged
or don’t get frustrated when you’re trying to figure out, Hey you know what? I gotta figure out how much
does your ingredients cost? Your packaging, your labeling, everything that goes
into your final product, costs you something. You gotta factor in your costs, your time. You gotta factor in your label. You gotta factor in your packaging, if it’s a bag or a container. You gotta factor in the ingredients. And then if you’re shipping it, how much does it cost you to ship it? If you’re charging your
customers, that’s different. If like before in the example, if I charge my customers five bucks then I ain’t gotta worry about that. Five bucks comes out of their pocket. It doesn’t come out of my bottom line. But then again, offering free shipping and then sometimes even sellers actually factor in the shipping costs into the retail price point. That happens a lot. I don’t necessarily do that. It’s just because our margins are so big. I don’t need to do that. Not on all of our items
but most of the items. But some sellers will do that. So you might wanna just charge your buyers a $5 flat fee to ship. I don’t know. And the reason I say, “I don’t know,” is it depends on the size of your product. If you’re bundling 20 cans of soup, obviously that’s gonna
weigh like 20 pounds. So you can’t just give away free shipping. If you’re selling 20 bags of popcorn, it probably weighs less than four pounds, you know what I mean? So it depends on the product itself. You have to know your shipping. Know your ingredients. Know the platform that you’re selling on. Be aware of the fees. And then from there, create
your retail price point. Now some people you’ll notice, let’s say you make a product, some people who can produce a product, there are manufacturing facilities that can put out the same
product you’re making for 50 cents and it costs you $3 to make. And that’s just a fact of life. Unfortunately, that’s just the way it is. But you can still compete with them because you can bundle. You can offer a different flavor. The product needs to
be unique unto itself. It there’s 20 people who
are selling the same item you could still get in there and get your piece of the pie. It’s just, come up with a creative idea of how do you bundle it? How do you package it? Can I add this? Or can I give this away for free? If you buy this, I’ll
give you this for free. That will attract a customer. You don’t have to reinvent the wheel. And you don’t have to remake a salsa. But maybe you make a flavor of a salsa that’s just not out there. That makes it a unique product that people will pay more for. So I hope this breaks it down for you. I hope you understand the methodology, I guess, if you wanna
say behind how to create your price points. There’s a lot of variables
when you’re selling online. So keep that in mind, okay? If you have any questions about pricing or anything else for that matter, again guys please let me know down below. I’m always here to help. Anything I can answer, I will definitely try to find the time to
answer your questions. And I appreciate everybody
who has subscribed. And if there’s anyone that you know, maybe a friend or a family who can use my channel, please do. Let them know. Send them my channel or email them. Or let them share my video as well. So thank you guys. And again, if you like my videos please do give me a thumbs up. It does help me to get some feedback. If you don’t like my
videos that’s fine too. You can give me a thumbs down. I always appreciate the
positive feedback, thanks guys.

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