How to Price Your Product for Online Sales

by Danielle Bloom

0 min read

Pricing a product is often more an art than science. Below is a set of formulaic steps anyone can use:

  1. Create two price points using the formula below
  2. Perform A/B split testing on these prices
  3. Repeat steps one and two to converge on an appropriate final price

A commonly used formula to decide on prices for step one is:Retail price = (cost of item / (100 – markup percentage)) x 100

For example, assume the your product costs $20 to manufacture and you want to try 60% and 75% markups. The retail prices to use in your first A/B split test are:

Retail price #1 = ($20 / (100 – 60)) x 100 = $50Retail price #2 = ($20 / (100 – 75)) x 100 = $80

References & Resources

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