Price Testing
Setting the right pricing in your storefront is critical to the success of your business. When you’re just getting started it’s hard to know exactly where to set prices for all your different products. There are exceptions to every rule, but in general, staying between the Minimum and Maximum Retail Prices set for you in the Re
Once you establish a customer base you may want to start price testing to maximize your revenue per order. How do you price test? By adjusting your retail price, measuring the results for a set period of time and comparing the commission earned for each testing period.
How Long to Test
The number of orders you receive per day will give you an idea of how long to run a price test. If you receive 50 orders per day, you’ll want to run your price test for a longer period – maybe a week or two. If you receive 500 orders per day, you may want to test for just a day or two.
In general, the more orders per day, the less time it will take to deliver valid results. Similarly, few orders per day will require a longer test period in order to see measurable results.
How To Price Test*
Let’s use .com domain names as an example.
First, you need to measure sales at your starting point to find your baseline that you will compare to your test results. In this example, let’s say my .com domain names are priced at $10/year and I’m selling 50 per week. My buy rate is $7.00. Currently, I’m making a gross commission of $150.
($10 – $7) * 50 sales) = $150/week gross commission
In other words, this formula is:
(Retail Price – Buy Rate) times Units Sold) = Gross Commission
So, let’s say I drop my price to $9/year. I test this for one week. During that week I sold 90 units. My commission at a retail price of $9 is $180, a $30 increase from my original retail price of $10.
($9 – $7) * 90) = $180
That’s better, but not a huge difference. I want to test $8/year. I run the test for a week. At a retail price of $8 my sales increased to 225 units for the week. My commissions are $225, a $75 increase from my original retail price of $10.
Wow! I love it! Let’s drop it more and get even more sales! So I test .com’s at 7.85/year for one week. That week my sales are 250 units. My commission is $212.50. Oops. I lost $12.50 in commissions. Why?? At some price level, the increase in units sold is not enough to compensate for the lower commission per unit that you receive. That is the entire purpose of a price test. At what price can you earn the most commission by balancing commission per unit and volume of units sold? The only way you’ll know is to test.
When to Price Test
Another thing to consider is the timing of your testing. Avoid testing during holidays or major world/local events. Shoppers surfing and buying habits change significantly during those times - you won’t get a ‘true’ measurement of your traffic and sales.
Always test during the same time period for each week or month. For example, if you’re running a test this week on Monday and Tuesday, use next Monday and Tuesday as your next test period, not Wednesday and Thursday, or some other 2-day period during the same week.
Price Testing Multiple Products
A word of caution about price testing: be careful how many different products you price test at the same time. A lower price for product A may cause more sales of product B. If you’re price testing both Product A and Product B at the same time, you need to be sure to measure the combined effect. By testing them separately, you would see that decreasing the price of Product A causes higher sales in Product B naturally, without having to reduce the price of Product B. I don’t recommend testing more than one product at a time.
For example, lowering your .com price may increase your .com unit sales as well as your email sales. If you are simultaneously adjusting your .com and email pricing, you may not understand what is really driving your increased email sales.
Good luck with your price testing! I wish you success and sales!
Stace
*The numbers used in this example are meant only to demonstrate the effects of changing prices on your products. These results are not typical for a real business.
Hello, and congrats for the timely idea of Reseller Roundup Blog. I am sure this will be quite useful for the reseller community.
I am referencing this section on your example:
QUOTE
How Long to Test
The number of orders you receive per day will give you an idea of how long to run a price test. If you receive 50 orders per day, you’ll want to run your price test for a longer period – maybe a week or two. If you receive 500 orders per day, you may want to test for just a day or two.
UNQUOTE
Actually, my question is what % of resellers receive between 50 and 500 orders per day?
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Good question. But unfortunately, it's one I don't have an answer to. Maybe some other resellers will add comments and let us know their average orders per day.
Remember, the numbers used in the example are exaggerated to illustrate a point. These are not real world numbers.
Thanks for the comment.
Stace
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I average 3 sales per month. I would be thrilled with 1 sale per day!!!!! Never mind 50 - 100!!!
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How long have you had your storefront up and running? Are you doing any advertising?
Thanks,
stace
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Hi Stace,
It is nice to setup a blog, i think the Reseller Control Center is the best overall, in my case i have a kind of niche market and my customers(1336 customers now) are price indifferent nearly upto 25$/domain and all customers have their hosting at my own servers at my office. My marketing problem is the language of the store. For this reason i cannot canalize/transfer these customers to my reseller store and i cannot market effectively, you can check it from my customer list that i have very few customer accounts compared to my customers. I want to help you if you thinks to develop systems on different languages. Kind Regards
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Thanks for your comment. Other resellers have also requested multi-language support and I think it's a great idea.
Stace
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Hi Mustafa,
[quote]...you can check it from my customer list that i have very few customer accounts compared to my customers.[/quote]
I'm really curious to find out where on the RCC every reseller can look at their customer list?
Wish you continuous success.
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Hi,
Since last year i am using RCC, before that time i was giving internet services using other companies to register domain names for my customers, mostly i did not transfered them to RCC, that is why i said my customer number is very less in RCC. My portfolio is approximately 13000 domain names, but nearly 100 or 150 are registered with RCC. I think the support and overall service quality of this reseller program is the best, but language really matters and the real reason i do not canalize my customers to my Reseller pages is that language problem. I can give every effort to help to translate it to my own language.
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We obtained the re-seller account for our clients who are utilizing our web-based software and need website hosting. We'r seeking an ability to upload our script to our re-sellers' accounts that our clients can access by clicking a button to run our script. The script creates a website that's part of our network. It would be great if they were able to even pay for that software right from their accounts.
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Hi Stace, i have a question that i did not get satisfactory answer from sales or support department : Do resellers take a share from the revenue generated by Google Ads? Share from the google ads on free-ad-supported-hosting?
Kind Regards. (i know that resellers take share from PPC on parked domain names)
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Parked pages and 4-sale pages share PPC revenue from Google Ads. Hope this answers your question.
Thanks,
Stace
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I'm surprised to learn that you do not share with their resellers the revenue from the google ads on free (ad-supported) hosting! How can be explained that PPC revenue is shared for the free domain parked pages but not with free ad supported hosting?
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Mustafa i am 110% with you as far as developing different languages interfaces.
Txs
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I started out my pricing too low, as I originally thought that I was competing strictly on price with other resellers, even though I was going to market in a vertical market setting. My volume of sales is relatively low but steady. I found that when focusing on a specific vertical market, I could raise prices modestly and not affect the volume of my sales, since little of my business comes from outside of my targeted customer base. I have also found that it was best for me to keep the domain pricing low, and only raise prices on the most popular additional value-added services.
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Thanks for your comment! Would you mind expanding a little on what you mean by 'vertical marketing'? I think they are resellers out there that could benefit from your expericence.
Thanks,
Stace
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The same complaint of all resellers.. the language issue, I have more than 100 customers ready to buy, but I need order and admin in Spanish
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Hey Stacey - just out of interest, I heard on the roundup that you use a WST page as your storefront. What is the address/domain name for your site so I can have a look?
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(This web site is no longer available on the Internet.)
My storefront url is www.domain-horse.com. Have a look! And I'd be happy to take any advice on improving it that you have to offer!
Thanks,
Stace
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Hi Stacey - not sure how to suggest new threads on this blogs - maybe you could start an 'ideas' comment where people could leave remarks?
I have a quick question about PPC commisions. I am an international reseller so I get a cheque every 3 months. Could you confirm that PPC commisions are simply added to this check? So I'm expecting my commision check for Jan-Feb-Mar in the beginning of May, will this also include the PPC commisions earned in Jan-Feb-Mar?
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Yes, sir. Your PPC commissions will be included in your regular commission check.
Thanks,
Stace
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Are there any particular reasons why commissions are not payable via a direct transfer to a PayPal account?
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Yes. We do not have the communications with PayPal for this type of payment developed.
Stace
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Besides the language possibility (which I fully support) it would also be great if pricing in different currencies could be considered.
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Hi, total rookie here but I do agree that the ability to provide products in different languages, would generate more revenue for everyone.
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I, totally agree with you. I have a customer in Argentina who doesn't speak any english at all. He is willing to buy several names but refused to do that on my site because of the language barrier.
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Hi, Stacey: I would like to summerize my e-mail thread (out-of-the-blog):
First, your reseller program is generally wonderful except for the international resellers needs.
You have no direct transfer payment solution yet. On the other hand, (as Mustafa said) language localization is very important, I have several arabic speaking customers is asking me to guide the in Arabic but i have no time for such personal services.
Meanwhile, the Reseller's panel interface needs a little touch in the following:
First, Commission Report in the Reseller Control Center should display ALL the commission available or at least 12 months not just 2 months per time.
Second, I cannot get a complete report of my customers and their purchases. Instead, I see a customer search option full of field.
Third, security check points is very boring. Whenever you are logged in my Reseller account I should not be asked to re-enter password when I roam inside.
Fourth, About Us option displays to the visitor the country field as "small letters: uk" instead of "UK or United Kingdom"
Again, thank you for your previous support.
Magdy ABD EL HAMEED
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The company has recently increased the storage space on shared hosting accounts to economy = 20GB, deluxe = 50GB and premium = 100GB.
Us resellers are still sitting at 20GB max, at prices MUCH higher. Are the reseller accounts going to be restructured so as to be competitive? At this time, I don't even have any reason to use my own hosting products.
Roger
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I will look at the hosting plan offerings and pricing. Thanks for bringing this to my attention.
Stace
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Stacie
Any feedback as to why the the reseller hosting products are significantly inferior and more expensive than those that are offered directly from GoDaddy.
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Not sure if somebody already caught this, but your second numerical example (under "How to Price Test) has an error in it. ($9 - $7)*60 = $120, not $180. Use quantity of 80 or 90 to make your point, which is a useful one.
Thanks for the forum.
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Thanks, Jon. You were the first one to catch that (or least the first to comment about it). Glad you like the blog. Stace
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Hi
I have a friend who would like to purchase domain with the website tonight that comes with it ,but he asked me if he will be able to use stormpay and integrate it with this site or will it only work with a linux or windows hosting account ,he only takes up membership fees and offer 2 or 3 products thats all that makes stormpay really convenient as it works with all international countries and funds can be drawn from their debit card at any ATM worldwide
Kind regards
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You'll need to email support about that question. support@secureserver.net
Thanks,
Stace
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If we put enough pressure on, they will eventually lower their costs and supply storefronts in spanish, french, etc. Let's just give them a chance. Meanwhile, forget about the US. Think Canada, Great Britain, Australia, etc. The US isn't the only place where people speak english. Good-luck!
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