It’s not always easy to price products on Etsy. On one hand, you need to make a profit. On the other hand, if you’re the most expensive in your niche, you won’t get far.
Pricing your products competitively means precisely that – pricing that beats the competition. But beating the competition doesn’t necessarily mean selling your products for the cheapest amount possible.
In this article, you’ll learn how to competitively price products on Etsy, as well as:
- Pricing vs. Profit
- Selling value to increase competitiveness
- Buyer psychology
Before we begin
This article is a part of a series specifically for new sellers on Etsy! If you just stumbled across this article and you’re unsure where to begin, we recommend you check out the first of the series, Everything You Need to Know Before You Start an Etsy Shop.
At Marmalead, we strive to offer real, practical advice for Etsy sellers right here on our blog and on our YouTube channel. The world of Etsy is constantly evolving, so if you have a question, you can’t find an answer to, reach out to us at firstname.lastname@example.org.
Let’s take a look at some keywords that are critical to pricing your Etsy products competitively!
The bottom line to price products on Etsy
Cost, value, price – these all have a similar meaning. And at the end of the day, “profit” is ultimately what you’re after.
To price your Etsy products competitively, we’ll need to dig a little deeper into what each of these words means.
Cost is how much it costs you to get your product sold. This includes your materials + your time + any other expenses to get your product in your buyer’s hand. If you make knitted scarves, a simple idea of your costs could be yarn, needles, the price of shipping, Etsy’s fees, and all the other random costs you can think of (like gas to the local craft store and your monthly internet bill). This is commonly known as your ‘cost price.’ The cost of your final product to you and the cost of your final product to your buyer are often two different things.
Value is the amount that someone is willing to pay for your product. Commonly mixed up with the “worth” of your product. A simple plumber’s wrench might be worth $15 at Home Depot. However, when your faucet is broken and the house is flooding, the emergency plumber who owns many wrenches is much more valuable than that single wrench.
Price is how much money you’re asking your buyers to give to you in return for your product. The final price may take into account your costs, or it may not. That emergency plumber knows that he will be needed in an emergency, so he sets his price accordingly.
And this is what we’re here to figure out. The ‘price’ in ‘competitive product pricing’ to maximize your profits.
But there’s another element to add to this equation.
To price products competitively, you really need to know the price your competitors are charging. It’s not hard to find out this information, but it’s also essential to assess how they came to this price. At the very least, try and establish their cost price.
Fees are the same for you as they are for your competitors. So take their final price and minus the fees and any other expenses you expect them to have. You’re now left with an approximate cost price for your competitors.
While it may seem quite complex, this is vital if you’re establishing a genuinely competitive pricing strategy for your Etsy products.
Note: A common mistake when pricing your products competitively is to find the price of your competitors and make your prices lower.
That’s not how this works.
Here’s how to charge more than your competitors but still get the sale.
How brand perception affects the way you price products on Etsy
What’s the difference between the remote control for a Samsung television and the remote control for a no-name brand?
Not much. They both do the same thing, but they’re just designed a little differently. They’re probably made in the same factory, in fact.
What’s the difference between the power supply for a Samsung television and the power supply for a no-name brand? Between the screen, between the casing, between the screws, the wires, and the solder?
Not a lot.
The difference is that when you’re buying the Samsung TV, you’re buying a brand name that you trust (if you’re into that sorta thing). You’re purchasing a product from a brand with multiple authorized repair centers if there’s a fault. A brand that has a reliable warranty. A product with a nicer greeting when you turn it on and a nicer ‘beep’ when you change channels (trust us, this isn’t a Samsung TV ad 😂)
Simply put, a Samsung TV and a no-name competitor product are near enough to be the same. Still, it’s the experience around the products that’s the difference.
The support, the after-sales service, how it feels to use and own the product – this is value-added selling and justifies the higher price tag.
You can replicate this feeling in your Etsy store by:
- Using custom packaging
- Adding a handwritten thank you note
- Having an extended return period
- Adding in a discount code for a return purchase
The final price of your product can vary depending on each of these elements.
But how does this help you price competitively?
Rather than selling the same product for a comparative price, you’re selling a far superior experience for a still comparable price.
In the picture below, you see two products of a similar price, but the more expensive product has added value in the form of free shipping.
With good product descriptions and photography, your customers know they’re getting something far superior to what your competitors are offering – and for a comparable price!
The left digit effect to price products on Etsy
Our monkey brains are easy to exploit.
Which number is greater?
Clearly, 30 is the bigger number. But in financial terms the 1-cent difference is negligible. Still, our monkey brain prefers the smaller number.
This is called the left-digit effect and is why we always see products for sale ending with prices that end in 45, 49, 95 or 99 cents.
If you’ve decided to sell a product for $40, consider rounding down the price an entire cent to leverage this effect.
This lets you charge a similar price to your competitors but still be cheaper.
Competitive pricing for your Etsy products doesn’t have to be rocket science. It’s a simple process of using some math and intuition to figure out how to get the sale at a similar price.
Invest and add value, use some psychology, and do some research. You’ll establish yourself as a trustworthy brand with a good product at an affordable price.
Interested in more things you should know before you start an Etsy shop? Well, you shouldn’t determine the price of your product without first Calculating Your Etsy Shipping Costs.
To read through the next article in this series, check back next week!