As a good rule of thumb, you must look at your strongest competitor's price for a given product and sell yours for 5% less. This gives your customers a reason to buy exclusively from you, especially if you price all of your products in this way.

It would be a simple matter if all pricing could be done this way. The truth about effective pricing is that you must be aware of the perceived value of the product in your customer's mind. Not all situations are equal, and you may be able to command a higher price than normal because you carry an item that is hard to find or your terms of sale (TOS) are more enticing to your propective buyer.

The most profitable businesses offer the best TOS to their customers. If your business offers support after the sale like we do, you are more likely to gain trust upfront from shoppers visiting your web site. Guarantees of 100% satisfaction are very appealing to new customers.

Try to answer product questions on your website in the form the benefits of the product. This allows even more credibility to your business and cinches sales that otherwise might be lost due to not enough information while your prospects are shopping online. Profit on the internet is derived from matching information about a product or service to the specific want for satisfaction as perceived by your customer.

Then you must consider a thing called elasticity. This is the common value of any marketable product. If the product you are selling is a hard to find item or an item that has a large amount of value added to it, then it is said to be highly elastic. On the other hand an example of an inelastic product would be something like common table salt.

Pricing a highly elastic product gives you more room to experiment with a correct pricing strategy. I recommend that you gauge the value added components of your product to arrive at an adequate price. For example, if you were selling winter coats, the value added components would be such things as down fill, a fur lined hood, or maybe an insulated inner lining. All of these things add up in a consumer's mind when making the purchase.

The point to remember is that the customer knows what they want. Your job is to give them the product they want, and price it so you can secure the sale and make future sales from the same customer as well. You would be well advised to pick a pricing strategy for all items of a category and apply it to all the items under that category to keep consistency in the customer's mind.

To summarize the main point, consumers will always attach a perceived value to every item they want to buy. If they think you are charging too much for the benefits that the item provides, they will not purchase from you, but continue searching the web. This means you lost a valuable customer and future sales.

To prevent this from happening you must research your competitor's prices and TOS. Then develop a pricing strategy that meets the needs of your customers and provides for the immediate sales to your company. In short, people buy the most benefits they can get for the lowest price available.