{"id":6454,"date":"2021-08-11T16:10:36","date_gmt":"2021-08-11T14:10:36","guid":{"rendered":"https:\/\/www.jimdo.com/blog\/?p=6454"},"modified":"2021-11-05T16:26:07","modified_gmt":"2021-11-05T14:26:07","slug":"price-calculation","status":"publish","type":"post","link":"https:\/\/www.jimdo.com/blog\/price-calculation\/","title":{"rendered":"The Basics of Price Calculation for Your Online Store"},"content":{"rendered":"\n

Calculating prices for your product is one of the basic steps of opening your online store<\/a>. Like many math problems, it can seem a lot more complicated than it actually is. In this article we\u2019ll show you a simple method to calculate the selling price of a product in your online store. <\/p>\n\n\n\n

You\u2019ll find examples of how to calculate prices, see how discounts and shipping affect your prices, and you can use our selling price calculator to set the sales prices for your own store products. <\/p>\n\n\n\n

Let\u2019s dive in!<\/p>\n\n\n\n

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Start selling your products online with Jimdo.<\/h4>\n<\/div>\n\n\n\n
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Start Now<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n

A comfortable price point for customers<\/h2>\n\n\n\n

The right price has to be high enough for you to make enough profit, but low enough that customers are willing to pay it.<\/p>\n\n\n\n

Many successful online stores work in a price range between 40 and 200 dollars. This sweet spot means every sale brings in enough margin to make it worth the cost of processing, packaging and shipping the order. It also means customers feel confident spending that amount. <\/p>\n\n\n\n

How much are your customers willing to pay?<\/h2>\n\n\n\n

When you set your prices, have a look at what competitors are charging. Pay extra attention to competitors that have been in business for a long time. You may not know how they have calculated their prices, but you can be certain that a successful store uses pricing that customers are generally willing to pay. <\/p>\n\n\n\n

Once your store is up and running, you can still experiment with different prices. If customers are willing to buy your product at 40 euros, will they also buy it at 45 euros?<\/p>\n\n\n\n

The value of a good deal<\/h2>\n\n\n\n

Would you buy a pair of shoes for $2? Would you expect to get good quality? What about a pair of shoes for $200? <\/p>\n\n\n\n

When customers compare different stores, they get a feel for the price range they can expect. If your store uses much higher prices, customers might expect a quality level they are not willing to pay for. The same goes for very low prices. If your prices are exceptionally low, raising your prices might actually help you sell more. <\/p>\n\n\n\n

The ideal price point is where your customers think they get slightly more value than what they pay for. <\/p>\n\n\n\n

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Start selling your products online with Jimdo.<\/h4>\n<\/div>\n\n\n\n
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Start Now<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n\n

What does your price say about your brand?<\/h2>\n\n\n\n

Your prices set expectations. How you live up to those expectations influences how people see your brand. A good luxury brand makes people say: \u201cIt\u2019s expensive, but it feels worth it.\u201d For a good bargain hunter brand, that would be: \u201cI can count on the lowest price.\u201d<\/p>\n\n\n\n

Think about how you want your pricing strategy to reflect your brand<\/a>. <\/p>\n\n\n\n

Basic calculation for your product prices<\/h2>\n\n\n\n

The basic selling price for your product is calculated with three numbers:<\/p>\n\n\n\n

  • cost price:<\/strong> how much you pay to make or supply the product<\/li>
  • profit margin:<\/strong> the percentage of profit you want to make <\/li>
  • taxes:<\/strong> the percentage of VAT or other tax you have to pay over the sale<\/li><\/ul>\n\n\n\n

    First, apply the profit margin to the cost price. Then apply the taxes to that number. <\/p>\n\n\n\n

    Example: <\/p>\n\n\n\n

    A pair of shoes supplied has a cost price of $25.<\/p>\n\n\n\n

    You add a 20% profit margin. <\/p>\n\n\n\n

    The tax rate is 17%. <\/p>\n\n\n\n

    So your selling price before tax is:<\/p>\n\n\n\n

    $25 * 1.2 = $30<\/p>\n\n\n\n

    And your selling price including tax is:<\/p>\n\n\n\n

    $25 * 1.2 * 1.17 = $35.10<\/p>\n\n\n\n

    You can calculate selling prices for your own products with this calculator:<\/p>\n\n\n\n

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