There are a couple different pricing strategies you can choose from for your reselling business. It may take some time to establish what works best for you, so I recommend picking the one that catches your interest and starting there. The beautiful thing about owning your own business is that you can change your strategy whenever you want – or even use a mix of both!
Strategy 1: List High and Accept Offers
This is the strategy I use most often. In order for this strategy to be effective, you’ll need to make sure you’re making a wise initial investment.
When I am out sourcing, I keep a goal in mind of making 6x my initial investment when the item is sold. For easy math, I’ve mentioned before that the average price I spend on an item is $7. So, 7×6=$42. When deciding if I’ll buy the item, I first check to be sure recent sold comps are at least in this ballpark. Of course, you’ll need to take other factors into consideration, too. Is the size desirable or a detractor? Are there others available that are in the same condition as mine, but listed for sale at a much lower price? Is the style current and/or classic?
Once I’ve ensured I’m making a wise purchase, I start the work of getting the item ready to list. With very few exceptions, I steam every item before photographing. This not only gets wrinkles out, but also sanitizes the item and gives me a chance to look over each item in detail. I can’t tell you how many times the dim light of the thrift store has covered up flaws that I later find while steaming. I will cover how to handle this situation in a later post, as it happens more than I’d like to admit. Once the item is steamed and checked over well, I’m ready to photograph and provide a detailed description of the item, including measurements and fabric content. As you can see, this process can take some time, but before long, you’ll find your rhythm and it’ll become second nature.
The benefit of this thorough process is that I can confidently list my item at the higher end (sometimes even above!) of comps. Of course I enjoy raking in the larger profit, but another benefit of this strategy is that it protects the comp price of the item. I often source the same brand multiple times. Selling at a lower price waters down the comps over time, and reduces what was once a high-selling brand to tragically below MSRP prices. I’d like to think I’m helping out all resellers by holding out for a higher sale and protecting comps.
While I wish all my effort in sourcing wisely, prepping my items for sale, photographing beautifully and writing a mesmerizing listing description always earned me a sale at my original asking price, unfortunately that’s often not the case. Buyers like getting a deal! That’s where accepting offers comes into play. On some platforms like Poshmark, making and accepting offers is how the huge majority of sales are made. It’s assumed that when you list something for sale on Poshmark, your buyer will send you an offer. I structure my eBay the same way. I list at the high end of comps, or even a little higher, and plan to accept a reasonable offer (usually, 10-30% off).
PROS:
Higher sales price = higher profit
Buyers who pay more *usually* cause less issues (see my post on customer service strategies for more on this topic)
Protect comps for future sales
Buyers whose offers are accepted are excited to get a deal
CONS:
Can result in slower sales
Sellers with the same product can undercut your price
Pricing needs to be evaluated regularly and lowered when necessary
Strategy 2: List Below Comps and Make Quick Flips
This strategy works best if you plan to have a lot of inventory to sell, or just want to make a quick start-up profit. This strategy is how I earned the initial funding for my reselling business, and what I would recommend for most beginners.
I purchased men’s Ralph Lauren button up shirts from Goodwill for $7, and sold them for between $12-18 on Facebook Marketplace. This was an easy way to make money because my Goodwill stores were loaded with these shirts in like-new condition, so it was easy to build up my inventory. I made $900 in my first month, and was able to use a large portion of that profit to roll into sourcing more inventory for the next month. If this strategy is speaking to you, check out my brand guide for a list of brands that consistently sell for $20+.
Pricing below comps often results in faster sales. This strategy may be best if you’re wanting to keep your start-up costs as minimal as possible. Also, if you’re starting with a lot of inventory, it may be worth it to you to turn a profit as quickly as possible. Keep in mind, it’s never wise to sacrifice 100% of your profit, and platform fees and shipping costs can quickly add up. Check out my blog post on shipping to learn how to get your shipping costs as low as possible.
Since your profit margin is smaller with this strategy, you may be tempted to spend less time on your listing. I’d recommend against that thinking, and still devote the time to making your listing look professional and detailed. Buyers have lots of options when buying online, and your goal is to convert lookers into buyers as often as possible. Having a clear and concise listing is a great way to earn a sale, and maybe even a repeat customer!
PROS:
Can result in turning a faster profit
Inventory is often easier to source
Easier way to learn the ropes of sourcing, listing, shipping and customer service
CONS:
Same amount of work to list the item, but smaller profit
Can water down comps over time
Requires lots of inventory for earning larger profits
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