Therefore, although you would be able to set and earn a much higher profit margin on jewelry, you would most likely make more sales in the computer product industry due to high demand. Yet if you try to add a 50% mark up on computer products then most likely you won’t make any sales. 

​Needless to say, there are different pricing strategies to use when setting the right price for your products, and it all begins with the cost of the actual product. And although operating expenses become another key factor in determining the price of the product, internet businesses rarely incur high operating expenses if any expenses at all, other than your main expenses such as web hosting and internet service for example.

The cost of the product includes the amount paid to the dropship distributor for the product plus any shipping or handling expenses as well.

The cost of operating your internet business includes web hosting, telephone, internet service provider, etc…

As an internet retailer, you would not be able to succeed in business if you were to sell your products below cost. Therefore, the retail price of your products should be high enough to cover the cost of the products plus expenses related to the business.
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Your next step in setting your prices is to look at how your competition is pricing their products. 

There are different pricing strategies and each is used according to the product line and the market as well.

The mark-up on the cost of the product can be calculated by adding a pre-set or standard profit margin, or percentage to the cost of the product. 

For example, if a laptop computer cost $545.00 on the wholesale distributors’ website then you can add an 11% mark-up or profit margin to the cost of the product in order to bring your final sale price to $604.95 ($545.00 + 11%= $604.95). 

Furthermore, to create and set a more appealing price, you can deduct $5 off the total price to create the new retail price of $599.95 which will appear more attractive to the customer than a price of $604.95

It’s also important to keep the initial mark-up high enough to cover price reductions, discounts and sales while still being able to achieve a reasonable profit. And internet retailers with a variety of product and sub-product lines would be able to use different mark-up strategies on each product as well.
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Applying the manufacturers’ suggested retail price (MSRP) is a pricing strategy used by smaller retail stores to help avoid price wars with competitors while still maintaining an acceptable profit. ​Some suppliers may advertise minimum prices but might also suggest the retail prices as well. And by setting prices with the suggested retail price then the retailer no longer has to calculate and set prices. However, when using pre-set prices, the retailer is not given the opportunity to have an advantage over the competition.
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Web shoppers have many choices and many times are inclined to shop around in order to find the best pricing. However, internet retailers using a competitive pricing strategy will need to provide excellent customer service in order to stand out from the competition.

Setting your prices, or pricing below competition simply means to set the prices of your products lower than the prices of your competitors on those same products or same type of products.

Needless to say, this pricing strategy works very well when you’re able to negotiate the best cost on the products from the wholesale distributors while also using a marketing strategy which focuses on price specials.
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Pricing above the competition, or what is known as “prestige pricing” may be used by internet retailers when exclusive and unique customer service can justify the higher price of the product. And such services can include consultation, installation etc…

Internet retailers which sell high quality merchandise that isn’t available elsewhere can become very successful when pricing their products above the competition. 
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The psychological pricing strategy is used when setting your prices to a pricing level where the buyer perceives the price to be a very good deal. And one of the most common methods used for psychological pricing is to use odd-pricing where the retailer uses prices that end in 5, 7 or 9.

The reason why psychological pricing works so well is because consumers tend to round down a price of the product to the lower dollar amount even if it’s only 5 cents less. For example, most shoppers will round down $9.95 to $9 instead of $10.
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The keystone pricing strategy is used when internet retailers double the cost of the product. In other words, if the cost of the product from the wholesale distributor was $100 then the retailer would mark up the price to $200 or $199.95.

However, very few products allow such margins today, especially, in a competitive industry. The only products which can be marked up 100% are jewelry products, used products, and unique products where the retailer is the creator and manufacturer of the product as well. And even then, not many retailers would use the keystone pricing strategy while trying to remain competitive.
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The multiple pricing strategy involves selling more than one item for one price, such as 3 items for $1, $9 or more. This method works very well for clearance, mark downs and sales events as well. Furthermore, consumers tend to purchase in larger quantities where the multiple pricing strategy is used.
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The discount pricing and price reduction strategy is a natural part of the retail industry, online and off. And discount pricing can include the use of coupons, rebates, seasonal sales and other promotional markdowns as well. And although little to no profits are made on discount pricing, retailers are hoping that consumers will purchase other products at higher margins while visiting their website. And many times, it’s that discount pricing that draws in traffic to create more sales and consumer awareness as well.
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Setting your prices is easy to do. And a simple method for setting your own pricing is to simply check what your competitors are selling those same products for and then meet, beat or slightly exceed their pricing. And if you have to exceed their pricing by $5 or more then look for extra ways to justify your prices by adding special, unique services and outstanding customer support.

Just be sure to mark-up and set your prices high enough to cover the cost of the product and make a decent profit while remaining competitive as well.