Let’s face it, the Internet makes it easy to shop. In a few minutes you can locate a number of stores that carry a product you want. You can compare products and prices easily. Gone are the days when a merchant had a captive audience of customers. Increased travel and the commercialization of the World Wide Web has seen to that.

This exposure to stores and services offered globally has both simplified and complicated something as basic as shopping and selling. There is the availability of, and constant access to, products and services consumers want. Shopping has become simple, instant, and convenient. Global competition and increased expectations of consumers has made pricing and marketing more complicated for merchants.

In a market where there are potentially limitless people selling the same product, how can an individual gain an “edge” on the competition? The most basic way to increase perceived value is to adjust the price. If I sell shoes and my neighbor sells the same shoes at the same price, our customers are likely going to be equally divided. If I lower my price, then my shoes could become seen as a better value. Alternately, if I raise my price, my shoes could be perceived as having a higher quality (thus more value).

People look for value and they can generally be divided in three groups. There are those who look at the “bottom line” and will ultimately make all decisions based on lower cost. Price can be adjusted down to appeal to these customers, but lowering pricing to a point where there is only a marginal profit is very risky.

The other group are people who believe “you get what you pay for”. This group of people are generally willing to pay more for a product or service, but their expectations are higher regarding customer service and customization. These people generally take a long term view looking at how a purchase will be able to benefit them in the long run.

The last, and smallest group, are those who buy based on prestige. They are looking for a name brand – the Rolex or designer fashion buyers. The general quality may or may not be better than average and the customer support is generally going to be particularly good. However, the main draw is the label, the brand, and the status or luxury that it implies. This last group is likely going to be difficult for most businesses to attract. Marketing and establishing a brand take many years and lots of money to do.

In a series of articles, I hope to address ways to appeal to the second, and largest, group of shoppers. People who are looking for quality and are willing to pay for it. In the current economic climate, the “edge” to making a sale online may not be as simple as lowering your prices.

Further Reading:

• 3Cs of Marketing (McDonough School of Business – Georgetown University)
• Pricing Strategy (About.com)
• Pricing Strategy (Internet Center for Management and Business Administration)

1. Internet Costs

You will need a website with a domain name that reflects your company or your product. You may want to have a target site name and a few backup names. These cost to register, however, there are a number of affordable domain registrars.

You will need a website to showcase your product or service. This can be as costly as you would like it to be and there are a number of options. You can try to put one together on your own, use a template, or have a professional design one for you. It has been my experience that this is in fact a good place to invest. A professional looking site will convey a professional feeling to your potential customers. The increased sales may be worth a little extra expense.

Finally, you will need to host your site. Again, there are a number of options and a wide range of prices. The good news is there are hosting companies that specialize in small or beginning businesses. These companies are affordable and may sometimes offer assistance, at an additional cost, with marketing and design of your product and site. There are so many web hosts that you will absolutely want to do some research to compare, not only price, but services and support.

2. Working from Home

This may sound like a dream for many, or may be necessary for some with children. The key is to remember this is WORK at home – not – HOME at work. You absolutely must set aside time to work without interruption. As a home-based business the time can be flexible, but I suggest at the very least 3-4 hours each day working. Being able to communicate your need for privacy with your friends and family during work time may be difficult to negotiate. I’d be willing to bet that most home-based e-businesses fail because of this issue.

Your office is an office, so you will need supplies. Basic things such as a file system, pens and paper, a date book, and a note pad to write ideas. You will also want to invest in a nice desk chair and a work space. You will be spending a good amount of time on your business. It may seem fun to picture yourself at a cafe with a laptop sealing a deal or checking your sales, but most likely you will be in a room in your house for a few hours each day. Your back will thank you for giving it support.

3. The Stuff People Forget About

You have an idea, you have a site to sell that idea, and you have a really comfortable chair to sit in, now what? Well, you need some way to accept payments. There are a number of services that allow your customers to pay with their credit cards, the most popular method of paying online. This is where 2Checkout can assist a new, or even veteran e-seller.

You will have to be able to sort through good sales and fraudulent sales. It is a sad fact of doing business that some people are not exactly honest. For even established e-commerce sites doing thousands of transactions daily, fraud is a problem and hard to fight. 2Checkout offers some of the industry’s best fraud protection. In my opinion, one of the most frustrating aspects of doing business has to be looking at a site’s sales and later finding out that a portion of them are not valid.

People expect timely answers to their questions and requests. What happens to those customers if your Internet connection goes down for a few days due to a storm? What if you get sick or go on vacation? If you have ever waited on hold trying to connect to a customer support representative you know that seconds feel like minutes and minutes feel almost like a lifetime. The same goes for email. Most people give up after 24 hours if they haven’t received an answer.

You may want to consider the value of having 24/7 telephone, email, and live chat support for your site. Just like your website, the more professional your customers feel you are the more they will trust you and the more likely they are to buy from you. 2Checkout acts as a reseller of your services and products, so it is in our best interests to be professional and prompt when supporting your site.

These are just a few of the things to consider when setting up a home-based business using the Internet to make online sales. As your partner, 2Checkout can alleviate some of the worry and “back end” issues allowing you to concentrate on building your site, your community, and your market.

Some Further Reading:

• Basic Guide to E-Commerce (Doing Business Over the Internet/Web)
• Unmask the hidden costs of self-employment
• A Good Resource on Starting a New Website (thesitewizard.com)

Price is a straightforward concept and potential customers will either pay or not pay for an item or service. Value, on the other hand, is a little more elusive. It is based on the customer’s perceptions. Not just their perception of the quality of the item or service, but their perception of what that item or service will do for them.

When a potential customer says, “I can’t afford it” in regards to a product they are saying one of two things. In one case, they do not have enough money to afford what is offered (price). In the other, they cannot justify the purchase because they do not perceive the benefit of what is offered (value).

Pricing can be negotiated, depending on your margins, to entice a potential customer to purchase a product. Value is more difficult to gauge. It becomes important to find out what your customer wants, not just what they need. You may have for sale the exact thing a person needs; you have it priced competitively, but still customers are reluctant to make the purchase. What is the perception of your product? More importantly, how can you find out?

Questions are helpful. Ask yourself first things like:

• Is this product easy to use/ install/ put together?
• Is my customer supported after the purchase?
• Is my product customizable?

I guarantee you; your customers are asking themselves:

• How easy is this to use?
• What happens if I have a problem?
• Does it come in blue?

Answering these questions in the affirmative increases the value of your product. Your customer perceives the product to be worth more because of their cost in time and/or effort to utilize the product is offset somewhat.

Further Reading (external links):

• Principles of Marketing
• bizcovering.com