Is it Really All About the Price?

 

Now, for the Big One (and if some people have seen this before, apologies… this one was originally posted elsewhere)

LEARNING FOUR – PRICING

I call this the “Ali, Me and Amazon” process… and we will take a few useful detours along the way…

But before we start.. it is helpful to know:

1) When it comes to pricing, and how people behave when buying… everyone is unique… and we all behave differently.

For example… I was buying a new video camera, with my friend… I went “That’s the cheapest, that’s the most expensive… I will have the one in the middle”… and he was horrified, because he is the sort of person who does 5 days research online before buying anything… which to me is a total waste of time, life is too short… and I could be reading a good book instead…

However, online you find each of these buying types and more… because we are all different, although strangely the same in other ways.

But if you assume that your average person will check out Amazon as a single comparison point, then you need to know what is happening over there… and as you shall soon see, Amazon is a goldmine of useful information for your own website.

2) Like I have posted previously, you are looking for the “bargain zone” price… not too expensive, or else people will think “I can get that cheaper somewhere else” and not too cheap, or else people will think “Too cheap, must be something wrong with it…”

And many people will be more cautious online, because despite all the pictures, they like to pick up a product, examine it, touch it… which you can’t obviously do online, so they tend to be on their guard, and need a little more convincing…

3) Some products need supporting information, which may be just as important as the price…

Parents need to know that the baby toys are safe…

Tech-geeks like to read the spec information…

OK… having said all that, let’s start talking… dinosuar toys !!!

Ever since I have been around for the last 50 plus years, small boys have been rushing around with a plastic T-Rex, so it is one of those interesting sub-niches within the toy niche…

And the target audience? Is not small boys…

Unless they have been given their own credit-card, access to a laptop… and been told “Go on Tommy, order whatever you want”

No, the niche is mothers, say 25 to 35, or grandmothers, say 55 to 65?
So put dinosaurs into Product Picker, and will see lots of fairly healthy results…

Side Note: I did a search on T-Rex, didn’t find high selling toys under that name, strangely… but got this:

http://www.aliexpress.com/…/2015-Fashion-J…/32463325316.html

8400 plus orders !!!

Dinosaur T-Rex jewelry… looks good from a 4-criteria perspective… who knew? Maybe its jewelry which appeals to men?

Anyway… back to our main search… let’s go with…

http://www.aliexpress.com/…/6pcs-lot-Dinos…/32503315608.html

… and it is a product which is tied to a movie that is still active in the cultural imagination, so that doesn’t hurt either.

And can I find it on Amazon? I think this is the same one…

http://www.amazon.com/Babrit-Jurassic-Dinosau…/…/ref=sr_1_3…

Or at least we can use it for pricing / comparison purposes… so if we compare prices:

Ali Express = $8.74
Amazon = $10.99

Which gives us a price difference… wait getting the calculator out… $2.25…

Now for some products the price difference is big, and you have a lot of room to play around in, in order to find the bargain zone price… but here it is more tight, less room…

If I was to test this, then I would probably try one test at $9.80 say… to see if Customers would see that as being a bargain (i.e. “Wow, that’s a bargain, where’s my credit card…”)

But if it didn’t show positive results I would ditch the product and find something with more potential… because I am only going to make $1.06 on each sale at the end of the day… so I might as well try and find a product which will return me a greater profit… so for this particular product I would do one test, if it didn’t take off, I would personally ditch and move on…

So basically, that’s how I play the “Ali, Me and Amazon” game…

You use the Ali Express + Amazon prices to work out where to pitch your price, somewhere between the two… and this is as valid a pricing strategy as any… (and there are other pricing strategies).

But this way, if someone is comparing you to Amazon, then you will always be coming in lower… and so will come off better in the mind of your potential Customer.

Note: I personally don’t use eBay for this, as for majority Amazon is seen as the gold standard, and eBay is viewed in a different way…

BUT WAIT !!!

Before we leave, there is a few things to mention… like I said, Amazon is a gold mine of useful marketing information…

1) Product Titles and Descriptions

Look at how the sellers are describing their products, the information…

OK, don’t copy and paste, that would be wrong… but if you think that it will help enhance your product, feel free to “re-word” on your own site… that’s OK…

And how they are pitching it…

One product I was helping someone with, they were pitching as a “puppy chew toy”… but when we looked on Amazon, the majority of sellers were selling it with the added bonus… “helps to build a puppy’s strong and healthy teeth”… so obviously buyers liked the idea of a fun toy which helps promote strong teeth…. i.e. fun + health… and that’s what was missing on his sales page for that product.

2) Customer Reviews…

If you see 100 Customer Reviews at 5 stars, you know that people love this product… but 3 at 3 stars… pause for thought maybe… and definitely look at what they are complaining about…

And reading the reviews can give you clues about what Customers appreciate and want from that product… and which you can then weave into your own sales page

3) Finally.,. the magic… “What Customers bought after viewing this product”… along with the additional “What Customers viewed after viewing this product”

Because this can be a way of finding other interesting products… some of which they actually went on to purchase… so then you go across to Product Picker and see if you can find the same or similar…

This is a great way to fill out your niche site with good stuff.

So like I said… Amazon can be a gold mine of useful information… and think of it as the “market research company that you don’t have to pay for”

TWO:

And further to my earlier post about pricing… I have been working with one student, on a product which sells on Ali Express for $3… and then sells on Amazon for $45… and people on Amazon are buying it (honest, the Ali Express sales are very healthy).

Now, I am not going to say what it is, because I don’t think it is right for me to divulge this information, student confidentiality etc.

But trust me, it does exist… (and you can find similar little gold nuggets)…

And I love this example, which is why I am writing it up…

Now the problem was the student was originally having was that they were selling it for $9.95, and getting no sales, and they kept lowering their price, with still no sales…

Until we looked at Amazon, saw it was selling for $45… and realized that instead of lowering his prices, he should be testing in the opposite direction, and that he should raising them… and my suggestion was that he should start at $25 and see what the response was.

So what was happening?

Well, this was a product were someone had taken simple household object, and put the logo of an expensive car on top…

So certain men were buying it, way above what the product should have cost, for the simple reason of the car logo on top.

Now, this is a product that you wouldn’t ever sell to women, who would be far too sensible (i.e. “You paid how much… for that… please tell me you’re joking.”).

But for a particular group of men who:

a) Had more money then sense
b) Could never hope to own that expensive car, but liked the idea of owning a product with that logo (i.e. a fragile male ego thing)

They are obviously prepared to buy.

And the reason why it wasn’t going for $9,95 was because these men saw it as being too cheap… and they “wanted” to spend more money for the feeling of having purchased a premium brand.

So they were quite prepared to pay out, over and above, for this particular product.

How weird is that?

So honestly, sometimes it isn’t about lowering your prices, but about raising them… and sometimes people aren’t just paying for the functionality of an object… but the intangible value that goes with it… which actually only exists inside their head.

ADDITIONAL:

And further to my earlier post about pricing… I have been working with one student, on a product which sells on Ali Express for $3… and then sells on Amazon for $45… and people on Amazon are buying it (honest, the Ali Express sales are very healthy).Now, I am not going to say what it is, because I don’t think it is right for me to divulge this information, student confidentiality etc.But trust me, it does exist… (and you can find similar little gold nuggets)… And I love this example, which is why I am writing it up…Now the problem was the student was originally having was that they were selling it for $9.95, and getting no sales, and they kept lowering their price, with still no sales…Until we looked at Amazon, saw it was selling for $45… and realized that instead of lowering his prices, he should be testing in the opposite direction, and that he should raising them… and my suggestion was that he should start at $25 and see what the response was.

So what was happening?

Well, this was a product were someone had taken simple household object, and put the logo of an expensive car on top…

So certain men were buying it, way above what the product should have cost, for the simple reason of the car logo on top.

Now, this is a product that you wouldn’t ever sell to women, who would be far too sensible (i.e. “You paid how much… for that… please tell me you’re joking.).

But for a particular group of men who:

a) Had more money then sense
b) Could never hope to own that expensive car, but liked the idea of owning a product with that logo

They are obviously prepared to buy.

And the reason why it wasn’t going for $9,95 was because these men saw it as being too cheap… and they “wanted” to spend more money for the feeling of having purchased a premium brand.

So they were quite prepared to pay out, over and above, for this particular product.

How weird is that?

So honestly, sometimes it isn’t about lowering your prices, but about raising them… and sometimes people aren’t just paying for the functionality of an object… but the intangible value that goes with it… which actually only exists inside their head.

 AND:
OK, just throwing this in as another interesting thought to keep at the back of your minds… say the Ali Express price is $5.00… and Amazon price is $15… that is a price difference of $10… and so you decide to run a test right in the middle at $10.00… and you get sale, after sale… Great! You have found the bargain zone… and yes, you have and you are making $5 profit on each sale… But what if you could have more… what if the bargain zone price went a little higher then $5… so you could also run some tests to see if people would pay $11, $12, or $13 say… so you check to see if you can maximise your profit per sale a little more… in effect what is your profit ceiling for any single product… which is exactly what Big Companies do when they test products… what is the maximum amount which Customers are prepared to pay for our products… after all we want to make the most money we can out of each product? Night everyone.
(c) Brian Parsons, July 2016

 

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