Pricing Strategies

Understanding Product Pricing

Pricing is one of the most important factors in your product strategy. The right price attracts customers while ensuring you make adequate profit. Price too high and customers won't buy; price too low and you'll struggle with profitability.

💡 Pricing Psychology

Studies show that customers often associate higher prices with better quality. A higher-priced product is perceived as better quality than a lower-priced version of the same item. Price strategically to attract your target customer.

Setting Your Base Price

Calculate Your Cost

Start by knowing your total cost per unit:

Cost Formula:

Total Cost = Product Cost + Packaging + Shipping + Storage

Example:

Product wholesale cost: ₦2,000
Packaging materials: ₦200
Delivery per unit: ₦300
Storage/overhead allocation: ₦100
Total Cost: ₦2,600

Determine Your Profit Margin

Markup is how much you add to your cost. Different industries have different standards:

Service-Based (100-150% markup)

Services, digital products: 2-3x your cost is reasonable

Handmade/Custom (150-300% markup)

Handmade items, custom work: 2.5-4x your cost is standard

Retail Products (50-100% markup)

Resold retail items: 1.5-2x your cost is typical

Electronics (20-50% markup)

Electronics have lower margins: 1.2-1.5x your cost

Competitor Pricing Analysis

Research what competitors charge:

Find 3-5 similar products online
Note their prices
Consider quality differences
Look at customer reviews (high reviews often mean higher perceived value)
Check their shipping and delivery times
Position your price accordingly

💡 Tip: Don't always compete on price. If you offer better quality, service, or convenience, charge more. Customers will pay for value.

Psychological Pricing

Price positioning affects how customers perceive value:

Charm Pricing (99 Pricing)

Price items at ₦4,999 instead of ₦5,000. Customers perceive it as significantly cheaper even though the difference is minimal. Most effective for lower-priced items.

Round Number Pricing

Use round numbers like ₦10,000 or ₦5,000 for premium products. Signals confidence and premium quality. Good for high-ticket items.

Anchor Pricing

Show original price vs sale price: "Was ₦15,000, now ₦10,000" - creates perceived value. Use during sales or promotions.

Premium Pricing

Price high to signal premium quality and exclusivity. Good for luxury items, limited edition, or high-quality handmade products.

Volume Discounts

Offer discounts for bulk purchases: "Buy 3 for ₦25,000" (₦8,333 each vs ₦10,000 individual). Increases order size.

Dynamic Pricing

Adjust prices based on demand and season:

Increase price during high season or holidays
Offer discounts during slow periods to move inventory
Test different price points to find the sweet spot
Monitor sales volume at different prices
Adjust based on customer feedback and demand

Sale Pricing with Compare-At Price

ShopKatalog supports "compare-at pricing" to show customers the value they're getting with sales and discounts.

💡 How It Works

When creating or editing a product, you can set:

Regular Price: Your normal selling price
Compare-At Price (Optional): The original price before discount

Example:

Compare-At Price: ₦15,000
Regular Price: ₦10,000
Savings: ₦5,000 (33% off)

When to Use Compare-At Pricing

✅ Limited Time Sales

Running a seasonal sale, holiday promotion, or flash discount

✅ Clearance Items

Clearing old stock or discontinued products

✅ New Customer Offers

Special introductory pricing to attract new buyers

Product Variations: Coming Soon 🚧

⚠️ Variants Feature in Development

Full product variant support (sizes, colors, materials, etc.) is currently in development and will be available in a future update.

Current Workaround: For now, if you sell products in multiple variations:

Create separate product listings for each variation
Use clear naming: "Blue T-Shirt - Size M" instead of just "T-Shirt"
Include the variation details in the product description
Use consistent naming across similar products

📋 What's Coming

The upcoming variant system will support:

Size variants (XS, S, M, L, XL, custom sizes)
Color variants with image support
Material/fabric options
Individual pricing per variant
Separate inventory tracking per variant
Combined variants (e.g., Size + Color)