One of the most difficult parts of becoming a supplier with Elvenda is setting a list price that ensures you make a profit on your products, while still making sure a seller is encouraged to list your products.
We don’t have a magic formula to force on suppliers – all industries are different, and some run on razor thin margins. This article is just a few thoughts on what should be involved in your decision.
Sellers carry risk too, and do have costs involved in marketing and selling your products that you should keep in mind. CPC advertising, retargeting, payment processing and operating the store all have costs that could easily add up to 10-12% of the sale price of a product. Also, keep in mind, if the seller is footing this cost from the order, you aren’t!
If possible, 25% off RRP is a very reasonable price to offer to sellers – hopefully leaving decent margin in the sale for you to grow and profit, while encouraging the seller to list, promote, and ultimately sell your product.
We’ve got a ‘quick set list price’ action on the product page that you can select that will default to 25% off RRP. You don’t have to use it however.
You can offer whatever discount you like to sellers.
Elvenda is a free market of suppliers and shippers – there’s no requirement to offer a minimum discount. We trust that you’ll set it to a reasonable margin for your industry and expectation of sales.
At the end of the day, if the profit margin you offer is too low, sellers probably just won’t carry the product.
You can change the margin later, and change it per seller.
To make a splash on the platform, build your reputation, and get the quality of your product out in the market, maybe it’s worth offering a higher profit margin to sellers for a period of time such as 90 days.
We rank suppliers based on shipping turnaround times and operating efficiency, so getting an influx of orders and shipping them quickly will build your reputation on the platform. Better reputation means higher position in search results, happier customers, and ultimately more sales.
The list price is adjustable per seller who carries your product. We’ve added this feature to encourage you to offer sellers who heavily market your product, or simply sell a lot of your product, a better price on your goods.
Trial and error
There’s nothing like cold, hard data. Experiment with your list prices and see how it affects sales and profit margins! Ask your sellers what they think of your profit margins. As we collect more and more sales data, we plan to share some insights with suppliers about what types of profit margins typically increase sales and what types don’t.
Have you created a supplier account with Elvenda yet? Give it a try at https://app.elvenda.com/register – there’s no risk, and only a fee on sales.