Increase in the price of the product

[KotoMeow(RU)]

if you need to save money, how much $ can you try to raise product prices? has someone found the balance of the maximum price?

[Swisspike]

I am in the process of determining EXACTLY what the breakpoint is between maximum profits, and people complaining about price, and not purchasing.

Seven percent.

At a seven percent mark up, I get - at most - just one person not purchase one product, per day. At 8%, I get 3-5 products that aren't purchased.

Now on day 28, I am getting about $2100 per day in sales..so to lose a couple of dollars for one product is perfectly acceptable, at 7%.

7% of $2100 is an extra $147 worth of revenue per day, above the recommended price.
8% of $2100 is an extra $168 worth of revenue per day, above the recommended price.

The difference between 7% and 8% doesn't seem like much, but $20 isn't worth the extra 3 to 5 lost sales, especially if individual products (dishwasher tablets, or toilet paper), are at least $10 EACH in lost profit.

I am running a test, now, to see if one product at 90% of the recommended price will generate additional profits. I am using salt, which has three shelves of 16 each, just in case there is a big run. I don't THINK that this is the case...I believe that the ONLY result of a pricing change is additional profits, OR a customer saying ... screw it, it's too expensive!

I like using percentage increase instead of dollar or cent amount increases. A dollar increase on a $2 soda? You're not selling any of them. A dollar increase on dishwasher tablets? You're leaving $100 on the table every day.

[Knottypine]

Originally posted by Swisspike:

Seven percent.

Yep, that's generally what I use for most products.

[Sten]

I just round everything up to the nearest 25 cent above the average price. i get maybe 1 or 2 lost sales per day. I'm happy with that and it's easier than doing math for each product.

[Swisspike]

Originally posted by Sten:

I just round everything up to the nearest 25 cent above the average price. i get maybe 1 or 2 lost sales per day. I'm happy with that and it's easier than doing math for each product.

Only need to do it once, and then adjust each day for the few products that are changed. You are losing a LOT of money your way, when money is tight.

[resonance]

Originally posted by Swisspike:

Originally posted by Sten:

I just round everything up to the nearest 25 cent above the average price. i get maybe 1 or 2 lost sales per day. I'm happy with that and it's easier than doing math for each product.

Only need to do it once, and then adjust each day for the few products that are changed. You are losing a LOT of money your way, when money is tight.

Products don't expire (yet) so you aren't 'losing' any money from expensive complaints. The product they don't buy stays on the shelf until someone does buy it. If anything, you lose time since it may not get bought today. However in terms of pure profit, raising the price makes you more money overall as you are only selling at higher prices and spending less since you restock less often.

Say for example you price something at $500. If even one person buys it once a month, then a box of eight will still make you $4000 before you spend anything to restock it. Of course it takes eight months to sell so obviously not worth it. Plus if it is too high and no one buys it, then you are not making anything, but you will still have the product to sell.

Eventually when/if they add expiry dates and things start going bad, then you will have to factor that in to your pricing.

[Swisspike]

Originally posted by resonance:

Originally posted by Swisspike:

Only need to do it once, and then adjust each day for the few products that are changed. You are losing a LOT of money your way, when money is tight.

Products don't expire (yet) so you aren't 'losing' any money from expensive complaints. The product they don't buy stays on the shelf until someone does buy it. If anything, you lose time since it may not get bought today. However in terms of pure profit, raising the price makes you more money overall as you are only selling at higher prices and spending less since you restock less often.

Say for example you price something at $500. If even one person buys it once a month, then a box of eight will still make you $4000 before you spend anything to restock it. Of course it takes eight months to sell so obviously not worth it. Plus if it is too high and no one buys it, then you are not making anything, but you will still have the product to sell.

Eventually when/if they add expiry dates and things start going bad, then you will have to factor that in to your pricing.

If it is priced too high, then you absolutely lose the profit from it. Each day is separate, and different from all other days.

There is no expiry dates, only generating revenue TODAY. I aim to find the sweet spot to maximize revenue. The greatest revenue will result in the greatest profit.

The ONLY way to increase revenue is to increase prices, while avoiding a loss of sales. I suspect that it may be possible to micro each individual product to see where this pain point is.

Gaining 7% additional REVENUE without losing sales is infinitely preferable to gaining 20% revenue on most products, then losing vast numbers of sales from customers that have refused to puchase an item.

I rarely have more than one customer decline to purchase an item. I am happy with that, and my 7% markup.

[resonance]

It isn't like your money is starting over each day. Whether you get the five dollars on day 1 or day 20, you are still getting it. You LOSE nothing. At most you just delay the gain, and unless you are speedrunning to complete the game in the fewest days possible, that should mean nothing.

[mariusbrox]

im looking forward for the exp dates on a few items like fresh goods! a store doesnt keep 120 packets of salmon on the self if they sell 20 a week!
so then im ready for buy what i expect to sell and then rather buy them often.... but the salt, i got 18 boxes at the storage xD i dont wanna restock it every day....

[Swisspike]

OK. I have been selling salt for the last 14 days. For the first 13, I charged 107% of the suggested price. Average sales were about ten per day.

For today, I dropped the price to 90% of the suggested price..and sold four units.

Lowering the price doesn't affect sales in any way.

I will try this for the next couple of days, and report back. 90 to 107 percent costs me about forty cents per unit sold, so it isn't bad.

[Tazmo]

Originally posted by resonance:

Originally posted by Swisspike:

Only need to do it once, and then adjust each day for the few products that are changed. You are losing a LOT of money your way, when money is tight.

Products don't expire (yet) so you aren't 'losing' any money from expensive complaints. The product they don't buy stays on the shelf until someone does buy it. If anything, you lose time since it may not get bought today. However in terms of pure profit, raising the price makes you more money overall as you are only selling at higher prices and spending less since you restock less often.

Say for example you price something at $500. If even one person buys it once a month, then a box of eight will still make you $4000 before you spend anything to restock it. Of course it takes eight months to sell so obviously not worth it. Plus if it is too high and no one buys it, then you are not making anything, but you will still have the product to sell.

Eventually when/if they add expiry dates and things start going bad, then you will have to factor that in to your pricing.

There is a cost that you are not considered. Turnover is very important. When items sit on the shelf and don't sell they continue to develop overhead costs. Wages and rents (overhead) continue and a portion of those costs apply to all items on the shelves. You can't see it but you are paying it every time you pay your bills.

To combat this overhead cost we need to improve turnover of all products. When you spend money on items that don't sell your money sits there not earning you anything. You would be better off buying items that do sell. You get your money back with some profit and then use that money to buy more items for additional profit. We have limited space for our wares so increasing turnover increases profits and reduces overhead costs for items sold. Stagnant money earns you nothing.

[Swisspike]

Originally posted by Tazmo:

Originally posted by resonance:

Products don't expire (yet) so you aren't 'losing' any money from expensive complaints. The product they don't buy stays on the shelf until someone does buy it. If anything, you lose time since it may not get bought today. However in terms of pure profit, raising the price makes you more money overall as you are only selling at higher prices and spending less since you restock less often.

Say for example you price something at $500. If even one person buys it once a month, then a box of eight will still make you $4000 before you spend anything to restock it. Of course it takes eight months to sell so obviously not worth it. Plus if it is too high and no one buys it, then you are not making anything, but you will still have the product to sell.

Eventually when/if they add expiry dates and things start going bad, then you will have to factor that in to your pricing.

There is a cost that you are not considered. Turnover is very important. When items sit on the shelf and don't sell they continue to develop overhead costs. Wages and rents (overhead) continue and a portion of those costs apply to all items on the shelves. You can't see it but you are paying it every time you pay your bills.

To combat this overhead cost we need to improve turnover of all products. When you spend money on items that don't sell your money sits there not earning you anything. You would be better off buying items that do sell. You get your money back with some profit and then use that money to buy more items for additional profit. We have limited space for our wares so increasing turnover increases profits and reduces overhead costs for items sold. Stagnant money earns you nothing.

100% this. Revenue is crucial to generate profits. You can't make a profit on an item if it doesn't sell. The KEY is to maximize the profit for each unit sold. This is done in two different ways....pumping the price up, and the second is to NOT pump the price up so far that you lose sales.

[Swisspike]

I see that there are a few others that are trying to reinvent the wheel.

Seven percent.