In this post, I’ll show you exactly how to price a product you’re wanting to sell without having to do a bunch of complicated research. Some gurus say you should price your product 2X your cost of goods sold (COGS). Others say you should price it 3X your COGS.

Well, I’ve got some bad news.

Your customer doesn’t care about your COGS and so basing your pricing solely on COGS is ill-advised.

In this post, I’ll show you exactly how I easily price my products and run through a few examples.

How To Price Your Products

Price your products in 4 easy steps:

1. First, search for the product you want to sell.
2. Second, browse Google Shopping.
3. Then take a notice on the price range of the product.
   1. Charge on the low-end of the price range if there’s a ton of competitors in your space.
   2. Charge mid/high-end of the price range if you think you can build a website and brand that’s much better than the competitors in the lineup.
4. Finally, if the price you came up with on step 3 isn’t reasonable (i.e. isn’t the 2-3X COGS the other gurus mention), then this product will be very difficult to sell. Go look for another product instead.

A question to ask is: “how come I can’t charge more than the price range? I can build a website with a great brand!”

The answer is: just because you have a website doesn’t mean you have a brand. And just because you have a fancy brand logo and your brand exists on the internet, doesn’t mean you have any brand equity. You can’t charge very high prices out of the gate because nobody’s ever heard of your brand. People pay top dollar for a great brand, but if they’ve never heard of you (because your site is so new), all your brand equity is imaginary.

So, to get the most traction as fast as humanly possible, I recommend within the available price range. If you charge a very high price, you might have to wait longer for your first sale – and when your first sale comes, you won’t be sure if you’ve just struck a goldmine or if you need more sample data, or if you need to lower the price. In other words, starting with a price higher than the established price range will waste a lot of time since there’s a lot more things to test before you can conclude this product no longer works. If you start within the price range and there are no sales after an entire week of testing, you know you can safely move on.

Example 1: Hair Dryers

Say you wanted to sell hair dryers, you’d just type in “hair dryer” on Google and get this:

You’ll notice the price range is between $60-$400. Looking at the websites, I observe that:

• MyBrushX’s website looks pretty dropshippy, but they have a unique product which is their brush also does blow-drying.
• It’s A 10 Hair and RevAir have pretty good websites.
• SRI Dry Pro has a unique website (in the form of a sales letter) and is kind of ugly.

You can reasonably expect that your website will look better that SRI Dry Pro’s and MyBrushX’s, but not “It’s A 10 Hair” or “RevAir.” The downside is that MyBrushX has a pretty unique product, so you probably want to probably charge $60 to undercut all of them. Even if you can convince customers your hair dryer is better than MyBrushX’s unique product, their $94.95 product is a 2-in-1 (comes with some hippy shampoo).

Keep in mind in this example, and in all examples you’re only starting at a certain price. If things are working out, you want to push the envelope and push the price up over time until your net profit decreases!

Example 2: Acupuncture Pen

You’ll notice acupuncture pens cost between $21 to $46. The $595 one doesn’t really count since its significantly different than the other acupuncture pens in the lineup. You can charge close to $595 though if you’re selling an acupuncture pen that’s much closer in functionality to Miridia Technology than Inspire Uplift’s pen.

Assuming you’ll be competing with the other, more economic pens, you should probably charge $45 for your acupuncture pen.

The reason why you can and should charge at near the top end of the price range is because the sites: TheraPen, Inspire Uplift, TrendyCustom, and Jarwest.com all look like scam sites and they still get top ranking on Google. This indicates a lack of competitors.

And if your website is built to be much better than those competitors (which is easy to do), then the natural reaction of your customers is that everyone else is copying you. This boosts your store’s credibility and will funnel most customers to buy from you even if your site is new. In other words: the other sites are done so poorly that those sites’ lack of trust automatic makes a good website very trustworthy. Thus, most of your opportunity here is based on your competitors doing an exceptionally bad job (as opposed to your being able to do an exceptionally good one).

Example 3: How To Price A Morbid Product

Here, you’ll probably want to charge mid-range ($300-$400) for your cremation box. This is due to the following reasons: the websites all suck, but there’s a wide variety of different qualities of boxes.

For example, the “Vivida” box is a very ugly box, but it is made in Italy. So, if your box is another box that’s made in Italy, but with a wider market appeal, charging $400 to undercut your competitor would be a great idea.

Kingston’s has no real reason why it should cost $760, and so you shouldn’t try to mimic their price.

Hardwood Urn is selling a hand-engraved urn. You wouldn’t want to touch the $845 price point because you likely won’t want to hand-engrave urns to start with (for rapid testing and initial scaling reasons).

So, $300-$400 is a good price to start ($400 if you can have an extremely high-quality earn that’s better looking than the “Vivida” + you have a website much better than your competitors which is easy to do in this case, and $300 if you have a good quality earn + website that’s better than your competitors).

You Should Price Your Product Based On Customer Needs, Not Your Needs

People give you their money based on what they’re comfortable paying. In other words, the market decides the price based on their needs, not based on what would “make your business work.”

So instead of looking at your products’ pricing as a function of only a multiplier of your COGS, you should price your products based on 2 things instead:

1. A multiplier of your COGS, and
2. What would be reasonable to charge the market based on competitor pricing.

If these 2 things don’t line up the way you want, you’ll save yourself a lot of time, headache, and money by just not testing the product altogether. And in a lot of cases, not testing a product is one of the biggest wins you can get.

P.S.: This is a new blog and if you’ve found this helpful at all, it would mean the world to me if you were to share this post to someone that you think this post might benefit. It would also be immensely helpful to me if you could give me any feedback on the content at hello@goodmoneygoodlife.com