Tony Sarno20 February 2007, 9:09 PM
Since we're selling mostly on the extra value we think we're creating for the customer, we've set our prices based on what we think the market will reasonably bear.
We decided Geek Gear would compete on the basis of providing niche value rather than low prices. The niche value would be the cleverness of our T-shirt slogans and our ability to select interesting techie gear we thought would amuse our readers enough to make them buy.
However, we would also experiment by selling at least one item purely on the basis of price: a 1GB MP3 player which can hold up to 240 songs. We can secure this from its supplier for $30. The going market rate for similar USB players is $80, so we're aiming to undercut competitors by selling it for $69.95.
In general, if you want to compete on price, you’ll need to sell a high volume of mass-market items. As Luke from NetMerchant nevrr tires of pointing out, this is a tough way to do business on the Net because you’ll be up against very fierce competition.
Since we’re selling mostly on the extra value we think we’re creating for the customer, we’ve set our prices based on what we think the market will reasonably bear. We haven’t aimed for a uniform mark-up across all products, with our margins varying significantly across the stock.
The only exception is the USB MP3 player, which we are selling on price.
NEXT: Ordering and holding stock