Since I revised my prices, I've been getting feedback from customers that we are priced way too high, but at the prices they want, I'd be losing money. With a lot of fatigue and a bit of self-doubt, I am beginning to think I have made a mistake somewhere.
This is my simplified model using hypothetical figures.
Product Cost = 2,000
Shipping = 1,800
Total = 3,800
0.1 x 3,800 = 380
Total = 4,180
Markup of 1.5 = 1.5 x 4,180 = 6,270
My markup is set at that so that it gives me the flexibility to go downwards to explore discounts when necessary.
I am operating in a premium sector, private labels with a mixed set of products. Feedback on quality is very good and I have gotten return customers and this in a developing market that has been ravaged by Rona. Fully expected it to bomb, but apparently, it's going to do OK.
Is my simplified model a sensible one or am I missing something? Are the workouts accurate?
Is my markup high? I felt it was high, but if it goes lower and I start working from a lower point, then eventually I will be simply churning $$$ and really not doing much else.