Pricing Strategies – How to Price a Product (E112)

Paulina MassonFounder of Shopkeeper Bio: Paulina is an Amazon seller and a founder of Shopkeeper. She calls herself a ‘numbers girl’. Her favorite topics are on optimizing profits, pricing strategies, cashflow management and ways to save on Amazon fees. Sponsors: Drip – Get a free demo of Drip using this coupon code!Spark Shipping – eCommerce Automation Links: https://shopkeeper.comhttps://www.linkedin.com/in/paulinamasson/ Transcript: Charles (00:00): In this episode of the business e-commerce. I talked with Paula Masson about pricing strategy. This is a business of eCommerce. Episode one 12. Welcome to the business e-commerce, the show that helps eCommerce retailers start launch and grow their e-commerce. Miss us. I'm your host, Charles [inaudible] and I'm here today with Paulina Mahsan. Paulina is an Amazon seller and the founder of shopkeeper. She calls herself a numbers girl. Her favorite topics are optimizing profits, pricing strategies, cashflow management and ways to save on Amazon fees. I started the show today to chat about how you can tweak your prices to make more sales to eCommerce products. So, Hey Paulina, how are you doing today? Paula (00:44): Hey Charles, thanks for having me on. Charles (00:46): Yeah, it's awesome to have you on. I love the topic of pricing strategies. I feel like it's one of those things that once you kind of established it's a very easy way of just increasing that profit margin on what you already have by like just some strategies. It's one of those things, it's very easy to just optimize. And if you're already getting X amount you can kind of squeak up to more margin. So it's a very cool topic for retailers. How'd you, how did you get into this? So you originally an Amazon seller, right? Paula (01:15): Yeah, I'm actually a software developer by background, so I am quite technical in nature. So all technical people like the numbers and I'm one of them. And so I liked math, I liked the calculus, you know, those types of things. And so I became an Amazon seller first and then I decided to build this little software for myself on the side that now became a successful commercial product called shopkeeper. But while I was doing that, I researched a lot about different fees that were not like explained. And I usually, if you get some fee charged on Amazon, it's not explained anywhere very much. Like for example, compensated underscore clawback, like what is this, you know, compensate a glove. Like, and it's not even in the help files and supports is not so helpful. So I've been researching a lot about numbers that are to do with Amazon and then eventually I just drifted out into optimizing my own pricing because that's also a numbers related and started looking into different psychology things that I could use for my prices. So I actually experimented quite a bit with that and I could share with you some of the learnings that I have and what I had tested them, what worked for me and what worked for other sellers when I shared with them as well. Charles (02:27): Yeah, that'd be great. Paula (02:29): Cool. So basically I guess I would start with the big picture first. I'll just tell you two sentences. The big picture, the big picture is that when you think about your pricing strategy, it's not enough to just, it's not the flow that you first create a product, then you publish it on Amazon, create the listing, ship it to Amazon, and then you sit there and think what price I should put. Actually the price strategy should start before you even go design your product. And the reason I save is because there are different of buyers that you can actually target. So there's been research done for general e-commerce and online research has discovered that there are three general types of buyers. One is called screws, those bargain hunters. And the other type is the luxury spenders. So the big spender, and then there's this middle somewhere,