Product Research: Maximize Profits By Researching Price Points

© Janiece V Smith - All Rights Reserved




I’m asked a lot of questions, but one that I am asked more often than others has me thinking:

“Once I am in contact with a supplier, how do I determine whether the product pricing is good enough to make a profitable return?”

Although this is an easily misunderstood factor, it is very easy to explain and understand. It breaks down to knowing the price points for each particular product.

It is crucial for any eBay seller to research price points before making a final decision on which products to sell. Price points are an important part of your research because the price for which items sell and the price for which you’re able to obtain them will directly affect the products you decide to sell.

Price points are divided into three categories:

The price for which you can obtain the product
The price for which the item is typically listed on eBay
The price for which the item is typically sold on eBay
Price Point One: Your Cost

The first price point obviously is not very difficult to figure out, because more than likely your supplier is going to tell you how much the product will cost you. However, this number is needed during your research because you use this number as your constant––meaning that this number will not change.

Price Point Two: Average List Price

The price for which the item is typically listed on eBay is important because this gives you an idea of what others selling the same product most likely are spending on it. This is particularly important to you because you need to purchase your products at a price that allows you to be competitive with other eBay businesses.

If you research this price point and find that the majority of sellers are listing the product far below you, you can assume you will not be able to compete with this seller. However, if you find the average list price of the item is within the range for which you can obtain the product, then this just might be a good deal for you to move forward on.

Please remember, there are sellers out there who have a different philosophy about list price. For example, some sellers list an item at $0.01 and “hope” it gets bid to a profitable amount or they put a reserve price on it. My opinion and experience is that this is not so wise. My advice about Price Point Two is to research those other sellers who are listing their items at prices that, if sold, will obviously realize a profit.

Note: Be sure to refer to my last article A Scientific Method To Ensure Your Products Will Sell On eBay about comparing apples to apples. You do not want to focus on the garage sale sellers but rather on the business sellers. Someone who is trying to sell the Armani suit he no longer wears isn’t going to list this used suit for the same price someone like you or I will who is obtaining the suit for resale purposes only.

Price Point Three: Average Sell Price

The price for which the items typically are selling after all bids are in is not as important as the other two points because we’ve already done our research, which was based on making a profit with the list price.

However, this price point can be very helpful for you in determining the following important factors:

How much leeway you have in working with your list price,
Your overall monthly profit and what you can expect, and
How much listing volume you will need to meet your monthly profit goal.
Note: As I mentioned in my previous article, be sure to always compare and research your price points within the active auctions and completed auctions. By researching eBay’s past and present auctions, you’re able to obtain information on your product of interest and minimize your chances of making a money-losing decision

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