How to price products for resale

in Price

Setting a price for resale, an important part of marketing, can be quite a tough task. If your prices are too high, you might not get many buyers. If you set your prices too low, buyers are going to question the quality of your product and you still might not get sales. So, you need to ensure that the prices you set for resale are correct. In doing so, buyers will know that you are charging a fair price and will be ready to purchase them. Here's a guide on how you can price your products for resale.

Factors Influencing How to Price Your Products for Resale

There are several factors that influence your putting a price on a product for resale, which are:

ü  Cost of products

ü  Overhead

ü  Competition

ü  System of distribution

ü  Wages

ü  Your desired return on investment


Besides these, you need to cover the basic, direct, and fixed costs, as well as income and profit.

ü  Fixed costs: Overhead is a fixed cost that has to be taken into account. For instance, you need to pay the telephone bill regardless of how much sales are made. If sales increase, overhead costs may increase too. It is recommended that you do bookkeeping to keep track of these costs. The other fixed costs are marketing expenditures, professional fees, bank charges, and transportation and business permits.

ü  Direct costs: This is associated with the sale and delivery of a particular product. When reselling a product, you need to consider the original price of the product and the cost of shipping it to you, repackaging, and labeling for resale.

ü  Income and profit: Most people confuse these two terms. Income is the amount that you trade your time for. Profit is the return on an investment and the incentive for the numerous risks that businesspeople take to start and operate their businesses.


Pricing New Items for Resale


There are several approaches that you can take for setting a price on a new product for resale.

ü  Cost-plus approach: You simply need to multiply the cost of your product by a markup factor. For instance, if a product is $25, and the markup factor that you have applied is 100%, then the retail price would be $50.

ü  Commonsense approach: You need to consider the sales value of a product when setting a price. For instance, if you purchase a lighter for $1 and sell it for $3, your markup is 300%. However, for something that is larger, like real estate or a car, you might only earn a meager percent on its resale. In other words, you need to apply your commonsense when pricing products for resale.

ü  Research approach: If you are a small buy-and-sell operator, the best way to price a product is by carrying out research in the marketplace. Learn about what the same products are being sold for, marketing techniques for their sale, and the target audience. Some of the techniques you can incorporate are:

  • Go online to marketplaces like eBay to research on prices.
  • Search through ads in newspapers, fliers, and magazines for prices.
  • Subscribe to product catalogs for cost information.
  • Consult with other retailers to find out how much they are charging.
  • Go mystery shopping to retail stores, and make comparisons in prices.
  • Ask suppliers.

Pricing Used Items for Resale

Setting a price for an item that has been previously owned for resale can be easy if you follow the research approach, as was done for pricing new products. You can make mystery-shopping comparisons and online searches, read classified advertisements, and more to determine the market value of a particular product. Besides these, you can also:


ü  Purchase price guides: To set a price for expensive products, like boats, cars and recreational vehicles, you can purchase price guides. These guides give a description of the product, state the condition of the item, and give a value based on the above criteria.

ü  Have professional appraisals: Having professional appraisals performed on products of a high value helps to substantiate the price that you want to set. As this method is quite expensive, you will need to include this in your selling cost.

ü  Create a sliding-condition scale: In perfect conditions, products are set to a price that is 70% of the new cost. Those items that are still saleable but have passed their days of glory are priced at 30% of their new price.However, there are some items that retain their value better as compared to others.


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Jane M Dawson has 1 articles online

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This article was published on 2010/11/13