7 Pricing Strategies I Used To Make $1M

pricing is the difference between getting sales and not selling anything it determines the amount of products that you're able to sell and how much profit you take home from those sales in

this video I'll give you the easiest calculation to figure out exactly what you should price your products at so that they actually sell no matter what product you're selling and I'll give you every trick that I know about how to get

the most amount of profit out of each sale the first step to this is to decide how much money you want to make this is because you can use that number to reverse engine near everything else and also make sure that you're paying

yourself first when I first started Drop Shipping having the goal of making $150,000 in my first year made it a lot easier to reverse engineer the profit and the type of business that I needed

to make I talk about a lot of different business models and ideas here on my channel because depending on your skills and goals there's no one siiz fits-all business model but the blueprint always

works the same for this video we'll make it super easy by aiming for $10,000 a month but don't be shy if you want to aim higher the calculation works for any product you can sell after you figure

out how much you're going to be paying yourself the most important step to growing and staying in business is to calculate your costs there are two main costs that you should be aware of and

the first one that almost nobody thinks about is your overhead you pay overhead expenses regardless of how much money you're making these are my overhead expenses for e-commerce so that includes

all of adobe's products for about $600 a year free pick which is a digital graph Graphics program printify so that I get a discount on all of the products

Shopify hosting a domain service canva and there probably some more all of these things are usually a one-time payment or a subscription and they're necessary for the overall functioning and infrastructure of the business my

total overhead is about $1,680 for the whole year that means I'm spending about $140 a month just to keep my business open but if you're just starting out you shouldn't have more

than maybe $20 a month if that there ways that you can start completely for free which is part of what I talk about on my channel so that you can minimize your upfront risk and maximize your long-term leverage the overhead expenses

should be fairly predictable and remain the same year round so I'll go ahead and add this overhead to our running total this would be a high estimate but it's always good to be conservative the

second type of expense is called a transactional expense and it tends to fluctuate more often let's say you're selling this mug it's going to cost you $3.39 plus

$559 of shipping and adding This Together gives you your total cost since I'm Drop Shipping this mug I'll only pay for that $8.98 after an order is placed this is

why it's important to pick a good supplier because if I bought the same thing off of printify I'd pay $444 per mug order since we'd be smart humans and use printify I'll just jot down that a

mug would cost us $8.98 per mug but that isn't the only transactional cost you'll also have things like credit card fees if you sell on Shopify or transaction fees and

listing fees if you sell on Etsy the super easy way to visualize this is by going to allora and I'll have a link for this down below the video and you can see what your fees are going to be depending on the price if it's going to

cost me $8.98 to make and ship the mug and we charge something like $20 including shipping you'll see the breakdown of the total costs and the profit that you're

left with even if you're selling a digital product and you don't have any product cost you'll still be charged the fees and if you want to know exactly what you should be charging the easiest

method is just to check the competition when I was starting my own mug business I simply checked what was already selling since Etsy is the easiest place to start a business I'll be using it to check the competition take a look at the

first example if you're selling a similar design which I have a video on how to do you could likely charge around $23 for the 11 oz mug if you plug that

into Aura you can see that each time this mug sells we'd make a 50% profit at $146 here's another example where they're selling this mug for

$112.99 but they're also charging $8.99 for shipping punching this in it's just under $22 and we would still receive a 48% profit margin since this is the more

conservative of the two estimates we'll jot this down in the notes when you're calculating this in Aura the selling price is the price plus the shipping and the cost is the total cost that we

calculated earlier an important detail here is if you're charging shipping and you're offering some kind of free shipping guarantee like this one where if the customer's subtotal is over $35

they'd get free shipping you have to make sure that the base price of the product covers your total costs for that item so for this shop if a customer orders three or more items each mug will

generate a profit of $560 even after they've given out the free shipping the supplier of the products should also give you a discount on shipping for each additional item

sold so you could calculate that in if you want to but to make this super easy just make sure that the base price that you're selling a product for covers the cost of one item plus shipping I found

it easier to sell products at a lower price and then charge shipping because more people are likely to click on your listing if it looks like a cost slap honestly you can just take the pricing strategy from a successful shop and

imitate it into your own shop and then apply some of the tips I'm about to share with you to increase the conversions this is where we can finally see everything come together now that we know the range that we can realistically

charge let me show you how we can dial in the price to charge more money make more profit per order and increase conversions the first method is one of the most effective and that's the price

to effort if you're selling the same product but you offer customization you can charge more for that same with a digital product if you're selling something that's pre-made it might not

sell too much per image but if you're selling a a custom digital print it could sell for a lot more there's also a range in here though because just changing the name on a mug is much

different than cutting out A Pet's face and that's much different than creating an entire portrait based around a pet the more perceived effort that goes into a product the more you can charge for it this comes across in your listings so

even if you're selling the exact same product as someone else make it look like you're putting in more effort to make a better product the second option is to increase your prices with positioning the reason that price

undercutting doesn't happen between huge e-commerce Brands is because they've all built up a huge reputation of delivering highquality products and great customer service even on a Marketplace like Etsy

having a large amount of reviews will allow you to charge more that just comes with time but instead of waiting you can also position yourself higher and charge more per order by offering something like returns and exchanges the safety

net for the buyers will justify a higher price now with all of those big fundamental blocks out of the way we can fine- tune it these are the small marginal improvements that make a huge difference if you could make an extra

dollar or two per order every 10,000 orders that's 10 to $220,000 the first method is always offer a discount if you aren't running a discount your listings just aren't going

to stand out on a competitive Marketplace like Etsy where everyone runs sales it also creates urgency in the buyer so they're more likely to buy it on the spot instead of waiting around if they think it's the permanent price

if you're going to run a 50% sale just make sure to double your price before you turn the sale on 80% of consumers are more likely to try a new brand if they're offered a discount beforehand

this is essential if you're not running a discount that ends at the end of every day then you're missing out in sales next is take advantage of fomo or the fear of missing out you can lower the number of items that are in stock and

this combined with a sale creates a sense of urgency where consumers feel like they should buy faster so that they get the good deal before it runs out if your product has multiple variations

like a shirt that com of Min colors you can do something quite powerful called a price bait a lot of the non- business owners don't like this strategy they think it's worse than the clickbait on my YouTube channel but all you do is

make one uncommonly purchased variant a little bit cheaper than all the others this way when you're on the browse page your product's lowest price will show up enticing people to click and ultimately

buy your listing the last tactic is kind of a twoin one and it's to use phonetical pricing and never round your prices up or down phonetical pricing is how long it would take to say or read

the price for example $ 1777 would be a terrible price because there's eight syllables in it1 1896 is only five syllables and if you saw these prices

separately from one another $ 18896 is much easier to read it doesn't even feel like that much more money I like ending all of my prices in either 96 or 98 cents cuz I feel like it distracts from

that big whole number at the beginning this mug at a glance looks like it's $14 but when you go to pay they'll end up paying over $23 $3 after everything this works on large prices too so when you go

to Apple no matter what you buy or how you configure it they would never price this computer at $7,000 but instead it's

$6,999 so you psychologically think it's closer to 6,000 than it is to 7 at least when you first look at it or try to remember it lastly if you're offering a shipping discount like this one I always

make it so that the discount applies as an upsell so a good example would be to sell a product for $1.98 so that they have to buy three items to get the free shipping so that way instead of losing

money on the guarantee you're making three times the profit I know that all of the morally Superior creatures in my comments will let me know how evil the strategy is but it really works I've got a lot of resources on my website which

will be linked below I hope you found this video helpful and as always I'll talk to you soon [Music]