{"id":5521,"date":"2014-11-03T08:45:00","date_gmt":"2014-11-03T03:15:00","guid":{"rendered":"http:\/\/shopnix.in\/blog\/?p=5521"},"modified":"2014-10-02T10:54:01","modified_gmt":"2014-10-02T05:24:01","slug":"lesson-6-ecommerce-training-how-to-decide-the-selling-price","status":"publish","type":"post","link":"https:\/\/shopnix.io\/blog\/lesson-6-ecommerce-training-how-to-decide-the-selling-price\/","title":{"rendered":"Lesson 6: Ecommerce Training &#8211; How to Decide the Selling Price?"},"content":{"rendered":"<p><img decoding=\"async\" class=\"alignleft wp-image-5524\" src=\"https:\/\/i0.wp.com\/shopnix.in\/blog\/wp-content\/uploads\/2014\/09\/price-tag-241x300.jpg?resize=191%2C238\" alt=\"price-tag\" width=\"191\" height=\"238\" srcset=\"https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/price-tag.jpg?resize=241%2C300&amp;ssl=1 241w, https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/price-tag.jpg?w=447&amp;ssl=1 447w\" sizes=\"(max-width: 191px) 100vw, 191px\" data-recalc-dims=\"1\" \/><br \/>\nWe all sell to make some profit and this is the very basic rule of business. Setting the prices right is the key step to achieve this goal. You need to keep in mind that both under-pricing and over-pricing can lead to losses. Under-pricing reduces your profit percentage and you end paying from your pocket, while over-pricing can drastically bring down the purchases made (resulting in an overall loss).<\/p>\n<p>So, how to set the right price? The first step is to clearly know how much the product in question would cost you (to buy as well as ship) and the profit margin you are looking for.<\/p>\n<h3>Product Cost<\/h3>\n<p><img decoding=\"async\" class=\"alignright wp-image-5523\" src=\"https:\/\/i0.wp.com\/shopnix.in\/blog\/wp-content\/uploads\/2014\/09\/images-4.jpg?resize=145%2C105\" alt=\"images (4)\" width=\"145\" height=\"105\" data-recalc-dims=\"1\" \/><br \/>\nSeveral overhead costs need to be included while arriving at the total cost of a product. These include costs related to:<\/p>\n<ul>\n<li>buying (or production cost in case you are the manufacturer)<\/li>\n<li>getting the product to your warehouse (where you would be stocking and packing the products)<\/li>\n<li>rentals and salaries paid<\/li>\n<li>packing and labelling<\/li>\n<li>logistics (for shipping the product to the buyer)<\/li>\n<li>miscellaneous aspects<\/li>\n<\/ul>\n<p>An example has been provided below.<\/p>\n<table style=\"border-collapse: collapse; padding: 5px;\" border=\"1\" width=\"50%\" cellspacing=\"10\">\n<tbody>\n<tr>\n<td><strong>Type of Cost<\/strong><\/td>\n<td><strong>Cost (INR)<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Product Cost<\/td>\n<td>50<\/td>\n<\/tr>\n<tr>\n<td>Transportation to warehouse<\/td>\n<td>2<\/td>\n<\/tr>\n<tr>\n<td>Rentals and salaries<\/td>\n<td>1<\/td>\n<\/tr>\n<tr>\n<td>Packing and labelling<\/td>\n<td>20<\/td>\n<\/tr>\n<tr>\n<td>Logistics<\/td>\n<td>30<\/td>\n<\/tr>\n<tr>\n<td>Misc<\/td>\n<td>1<\/td>\n<\/tr>\n<tr>\n<td><strong>Total Product Cost (TPC)<\/strong><\/td>\n<td><strong>104<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>According to the example, you can note that while the actual buying cost was Rs 50\/- you would be spending another Rs 54\/- as overhead costs. Hence, knowing the correct product cost is highly important.<\/p>\n<h3>Profit Margin<\/h3>\n<p><img decoding=\"async\" class=\"alignleft wp-image-5522\" src=\"https:\/\/i0.wp.com\/shopnix.in\/blog\/wp-content\/uploads\/2014\/09\/for-immediate-profit-digitalaptech-300x279.jpg?resize=200%2C186\" alt=\"for-immediate-profit-digitalaptech\" width=\"200\" height=\"186\" srcset=\"https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/for-immediate-profit-digitalaptech.jpg?resize=300%2C279&amp;ssl=1 300w, https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/for-immediate-profit-digitalaptech.jpg?resize=1024%2C954&amp;ssl=1 1024w, https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/for-immediate-profit-digitalaptech.jpg?w=1435&amp;ssl=1 1435w, https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/for-immediate-profit-digitalaptech.jpg?w=1280&amp;ssl=1 1280w\" sizes=\"(max-width: 200px) 100vw, 200px\" data-recalc-dims=\"1\" \/><br \/>\nWhile it may seem a lucrative business, most of the retailers sell their products at a margin of 20-40%. However, this may vary with the type of product, quality of the product, local availability and a few other aspects. What you also need to keep in mind is the discount expected by wholesale buyers (anything between 10-30% depending on the volume) and that you would offer during specific periods (such as seasonal discounts). Once you have decided on your profit margin, you are ready to calculate the final price of the product.<\/p>\n<h3>Selling Price<\/h3>\n<p>You can use the following formula to arrive at your Target Selling Price (TSP).<img decoding=\"async\" class=\"alignright wp-image-5525 size-medium\" src=\"https:\/\/i0.wp.com\/shopnix.in\/blog\/wp-content\/uploads\/2014\/09\/Price-tag-vector-5-300x272.jpg?resize=300%2C272\" alt=\"Price-tag-vector-5\" width=\"300\" height=\"272\" srcset=\"https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/Price-tag-vector-5.jpg?resize=300%2C272&amp;ssl=1 300w, https:\/\/i0.wp.com\/shopnix.io\/blog\/wp-content\/uploads\/2014\/09\/Price-tag-vector-5.jpg?w=340&amp;ssl=1 340w\" sizes=\"(max-width: 300px) 100vw, 300px\" data-recalc-dims=\"1\" \/><\/p>\n<h4>Step 1<\/h4>\n<p>Know the Sales Price Multiplier (SPM) = 100% &#8211; Profit Margin<\/p>\n<p>For eg., if you are looking at a profit margin of 33%, then your SPM would be 100-33, which is 67%<\/p>\n<h4>Step 2<\/h4>\n<p>Calculate the Target Selling Price (TSP) using the below formula<\/p>\n<p><strong>Target Selling Price (TSP) = (Total Product Cost\/Sales Price Multiplier) X 100<\/strong><\/p>\n<p>Continuing from our previous example, we can calculate the TSP for our product as below.<\/p>\n<p>TSP = (104\/67) X 100<\/p>\n<p>TSP = 155.22; rounded off to 156.<\/p>\n<p>Accordingly, your profit for the example product will be <strong>Rs. 52<\/strong> (156 &#8211; 104).<\/p>\n<p>You can calculate the prices for all the products in a similar way and arrive at the target selling prices.<\/p>\n<p>Now that you have understood the basics of pricing, we will take up the next aspect in the coming article.<\/p>\n<p><strong>Meanwhile,\u00a0if\u00a0you have any questions or would like me to cover a particlar topic in the upcoming lessons, then please let me know by leaving a comment.<\/strong><br \/>\n<!-- Another article --><\/p>\n<p>Want to increase customer loyalty on your online store? Find out how&#8230; <a href=\"http:\/\/shopnix.in\/blog\/5-simple-ways-to-improve-customer-loyalty-on-your-ecommerce-store\/\">5 methods to increase customer loyalty on your ecommerce store<\/a>.<\/p>\n<p>The author,\u00a0<strong>Dr. Lirish Chinnappa<\/strong>, is the founder of\u00a0CoorgShoppe.com, an online store that sells cool stuff from\u00a0Coorg. He also moonlights as a dentist and writes for various technical papers around the world.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>We all sell to make some profit and this is the very basic rule of<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[20],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Lesson 6: Ecommerce Training - How to Decide the Selling Price?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/shopnix.io\/blog\/lesson-6-ecommerce-training-how-to-decide-the-selling-price\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lesson 6: Ecommerce Training - How to Decide the Selling Price?\" \/>\n<meta property=\"og:description\" content=\"We all sell to make some profit and this is the very basic rule of\" \/>\n<meta property=\"og:url\" content=\"https:\/\/shopnix.io\/blog\/lesson-6-ecommerce-training-how-to-decide-the-selling-price\/\" \/>\n<meta property=\"og:site_name\" content=\"Shopnix - eCommerce platform\" \/>\n<meta property=\"article:publisher\" content=\"http:\/\/facebook.com\/shopnix\" \/>\n<meta property=\"article:author\" content=\"www.facebook.com\/coorgshoppe\" \/>\n<meta property=\"article:published_time\" content=\"2014-11-03T03:15:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2014-10-02T05:24:01+00:00\" \/>\n<meta property=\"og:image\" content=\"http:\/\/shopnix.in\/blog\/wp-content\/uploads\/2014\/09\/price-tag-241x300.jpg\" \/>\n<meta name=\"author\" content=\"lirish\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@coorgshoppe\" \/>\n<meta name=\"twitter:site\" content=\"@shopnixdotin\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"lirish\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/shopnix.io\/blog\/lesson-6-ecommerce-training-how-to-decide-the-selling-price\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/shopnix.io\/blog\/lesson-6-ecommerce-training-how-to-decide-the-selling-price\/\"},\"author\":{\"name\":\"lirish\",\"@id\":\"https:\/\/shopnix.io\/blog\/#\/schema\/person\/1a5436ba148b9bd27fc2bbef2007b009\"},\"headline\":\"Lesson 6: Ecommerce Training &#8211; 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