Why Lowering Your Price is NOT a Good Marketing Tool

October 7, 2010 How to Sell Online

You have probably thought about lowering your prices at some point as a way to bring in business. After all, when you go shopping price probably plays a lot of importance in regards to where you make your purchase. However, in the drop shipping business lowering your price is not always a good marketing tool.

Although you might bring in some business by lowering your prices, you will more than likely struggle to offset your costs. Even though drop shipping takes less overhead than some business ventures, you can’t ignore the fact that you will still have expenses. For instance, you will still have to pay for your website domain, any help that you enlist in your business venture, as well as any marketing expenses, or other business incidentals that you incur. If you are trying to earn a living off of your business, then you can’t ignore your own needs and bills, too.

By lowering your prices, you will be working just as hard as you were before, but actually making less money. This might cause you feel stressed, overworked, tired, and resentful of your drop shipping business.

These things aside, lowering your prices does not always tell your customers that they are getting a good deal on your products. In fact, sometimes it sends an altogether different message. You could inadvertently be telling your customers that your products are actually substandard to the ones that are being sold at higher prices.

If you are considering two different sets of prices, it’s almost always better to go with the higher one, or to average them out and go with something in the middle if you are still unsure. This will ensure that you make a decent profit. You can always lower your price for a sale or promotion, but it’s much harder to raise your prices later on.

If you do need to lower your price later on, then instead of letting your customer believe that it was over-inflated to begin with, couple the discount with something else. For example, if you are offering a 5 year warranty on a product and the customer wants it for $20 less than you have it priced, then consider dropping the price as well as reducing the warranty. That way, the customer also has to compromise and you have kept your integrity.

You will often find that having a “sale” or “promotion” brings in customers more readily and helps you in your profit margin far better than having low prices from the very beginning. Although you do want to compete with your competition, there are far better ways to do it then by shrinking your profits until they are a little of nothing.

Even though you know that markups have to be made on drop shipping products in order to make a profit for yourself, setting them too low can mean that you’re making very little money in the process, and that defeats the purpose of having a drop shipping business.

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Why Lowering Your Price is NOT a Good Marketing Tool

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