Ecommerce Ebook EN V2 (2) - Flipbook - Page 8
EVALUATING YOUR IDEA
Once you have a product idea in mind, you must determine if it will sell.
Market based criteria
What is your potential selling price?
The first thing to look at is market based criteria. These are criteria
that are usually external facing like market size, target customer,
whether you’re dealing with a trending product, and so on. Is there
a market ready to receive your product?
The lower the price, the lower the potential profit per unit. This
translates into more marketing dollars to find more customers.
It has been generally accepted that products selling between
$50 and $150 hit a certain sweet spot where you can make a
respectable amount per unit. Higher prices may make customers
hesitant to purchase online or expect premium services like phone
support. Of course, with greater brand recognition and loyalty,
increasing prices is viable.
Product based criteria
Product based criteria deal directly with the product’s viability.
These criteria can help you get a better understanding of your
product’s strengths and weaknesses.
Is there a market
ready to receive
your product?
What is your potential markup?
Markup is the amount over the cost of the product (variable and
overhead). It’s essentially your profit. There is no set rule for
markups, but do check product markups in your activity sector.
Also, as your business grows and you produce more products, the
unit cost will go down, boosting your markup (economies of scale).
EVALUATING YOUR IDEA
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