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The Kong Academy provides actional hints, tips and guides to making the most of your eCommerce store.

PPP: Price Products Properly

Kong Academy - How to sell online

Here we take an indepth look at particular topics of interest to beginner and established webstore owners.

PPP: Price Products Properly

Julian James

We often say, “PPP.” It’s our advice to store owners; “PPP: Price Products Properly.” To do this, there’s no stand-alone formula to suit all markets, but you should know yours backwards and influence it through pricing.

You might make your own products, or maybe you source and resell from your store. Whatever you do, you must PPP, and we’re here to show you the way. These are the basics, and to keep them fun and memorable, we’ll base our sage advice on a toy gorilla.

Recommended Retail Price

Let’s say you sourced a toy gorilla from a manufacturer or wholesaler, it should come with a recommend retail price. You don’t have to use it to PPP, but it’s a good guide and a ‘price stabiliser’ between you and other retailers.

This cuddly gorilla; how broadly or narrowly available is it? The more broadly it’s available online, the more uniformly-priced it should be. So be guided by recommended retail prices — they can save you the bother of having to PPP from scratch.

Think of a number, double it      

Think about your profit margins. If they don’t have a recommended price to go on, shopkeepers mark up wholesale prices by 50% at least. What’s more, many retailers turn to ‘keystone’ as their formula. This is as easy as ‘think of a number, double it’, because it really does entail taking a wholesale price and doubling it. So you could take a £ 15 cuddly gorilla from a manufacturer or wholesaler, and sell it online for £30, no wait; £29.99.  

Ultimately though, consider this soft stuffed thing. How much are shoppers willing to pay for such cuteness? We’re discussing market value here, the way estate agents value houses. Charge what people are prepared to pay! Price products this way, and every day is payday.

Pricing from Scratch

Many eCommerce stores fail to factor in everything and under price their products. Others overcharge by cramming in all their costs in an effort to turn a profit with a single product.

To PPP, you need to cover your costs and factor in profit. We recommend that you estimate the costs inherent in each of your products. Take Toy Gorilla for example. Create a spread-sheet of everything you need to cover per-month for — just it! These might include:

  • Manufacturing cost
  • Supplier’s cost
  • Delivery-to-your-warehouse costs
  • Stock-taking costs
  • Your salary as owner or manager
  • Employees’ wages
  • Your fixed overhead costs (mortgage, rent, insurances) 
  • Your variable overhead costs (delivery, utilities, pest-control)
  • Debt service costs (costs associated with borrowing money)
  • Any additional production costs (bar-coding, packaging)
  • Your marketing/advertising costs
  • Return on the capital costs invested by you/owners/shareholders
  • Capital costs for future expansion 
  • Income tax

Add these estimates together. There. You have a raw figure of what money Toy Gorilla is made of. If you were to sell it for this amount, you might as well spend your days at the zoo. So get tough. Decide what percentage you need to mark up Toy Gorilla by, and how many you need to sell to make a thumping good profit.

If you would rather not price from scratch, how are your competitors pricing identical gorillas? Yours is just as cuddly, but perhaps you could justify a higher price by offering an extra or two. How about a feeding bottle or free delivery? 

Tips and Tricks

Exploit the magic of odd numbers. For example, a ‘£29.99’ price-tagged toy sells a lot more than if it’s tagged ‘£30.’ So price your gorilla just below £30, or raise it to £ 33. Hold on; £33 and £35 send out nearly the same numerical signal. Tempted?

Use time to your advantage. You can accelerate sales if you advertise that a price is an ‘introductory offer’ or limited to ‘one month only.’ Or try offering a short-dated voucher code that only lasts a weekend. ‘Buy one - get one free’ offers are popular too; they’re better than ‘50% off’ promotions that always seem to shout “I’M LOW VALUE!”  


Finally, imagine yourself shopping for your product. Would you be willing to pay the price? The main thing is to retain a balance between what you’re willing to pay, and what it takes to give your eCommerce store — your eCommerce business — a skyscraper-high revenue. 

PPP: Price Products Properly and you’ll bring cash-flow, financial stability and eCommerce store success.