If At First You Don’t Succeed, Raise Your Prices

April 28, 2013

General, Motivation

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I was ticked off. A number of months ago, I had a particular washing machine for sale almost a week and it had not sold. Out of spite, I decided to raise the price $50 and relist it. To my astonishment it sold almost immediately. Then it happened with a refrigerator that wouldn’t sell until I raised the price an additional $20. Why was this happening?

1. Timing. Appliances, like many other items, tend to sell better on the weekends. If the item was buried under hundreds of other appliances, the odds are that people weren’t seeing the ad. When I reposted it, it was seen by a much larger audience and quickly garnered a buyer.

Posting items in the evening about 8pm or so is a great time, as most people do a lot of Craigslist searching at the end of the day. Even if they don’t call you that night, they will print out your ad or bookmark it and call you first thing in the morning. It happens to me all the time.

Another great time to post is about 8:30-9 am in the morning, especially on the weekends. People that are looking to purchase a specific item that day will go on first thing in the morning so they can complete the purchase that day.

Outside of those two times, I feel it comes down to a lot of randomness. You just never know when someone is going to pop on right after you list something and snap it up.

2. Perceived quality. People associate higher quality with higher price, even if it’s not true. A certain HDMI cable manufacturer wanted three grades of an HDMI cables, so they gave them three refresh rates, which is impossible, and they got caught. Or look at bottled water. $4 for a bottle of water? The same water costs a few cents, even if you run it through a filter. There are always people that will pay more for a product that is perceived to be a premium product. Alex Mayyasi wrote a great post on this recently over at Priceonomics.com.

Basically, find the three price levels for the product you are selling. Then, if the condition of your item allows, price it where there is the greatest need. So if there are a lot of low priced refrigerators, price it a good bit higher and see what happens. Or if there are a lot of high priced ones, and you still have some margin to work with, price it low and just move it quickly and buy another item.

Lastly, never stop learning. Buying and selling things is as complex as the people you are dealing with. There is always more to learn and room to better your skills. Study the people you are buying and selling from. Figure out what they want, and find a way to give it to them. If at first you don’t succeed, raise your prices. Just don’t sell three grades of HDMI cables.

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15 Responses to “If At First You Don’t Succeed, Raise Your Prices”

  1. Candice Says:

    Great Post Ryan!

    Reply

  2. Joel Fredericksen Says:

    Perceived value is definitely what always surprises me. While most of us love free stuff there are many folks who only want new. That’s why they won’t use thrift stores. They would rather spend extra even if it is something they won’t use a lot. I know someone who uses Craigslist but won’t consider “free” stuff. He says, “If it isn’t worth anything to the person who owns it then it’s probably worthless to anyone else.” I laugh and tell him, “Then give ‘em some money for it if that makes you feel better.”

    Reply

    • Ryan Says:

      That’s funny. It seems like there is a general unwillingness to do a little research on a product and really learn what a good value is. I think it’s just a mental barrier that people need to get over.

      Your example is perfect.

      Reply

  3. Jason Medley Says:

    Right on! Plain and Simple…It is the differences in perceived value that allow us to make money on Craigslist!! Find a market with the greatest variance and go to town!!

    Reply

  4. Isabella Says:

    Great thoughts. One of the blogs I read is a woman who is a Power Seller on eBay. Before listing a new item, she checks the completed sales and may see a wide price range. She always picks the high completed price as the guideline for her own pricing. She says that if someone else can get that price, she can too!

    Reply

  5. Julie Says:

    Excellent advice. I couldn’t agree more.

    Reply

  6. Rick Says:

    Amazing. This actually worked for me. Thanks for the advice Ryan.

    Reply

  7. Robert Says:

    Marketing is everything. I once had a nice little British sports car that I was anxious to sell, due to financial pressure. I listed it about 20% below market value…and it just sat. No calls, nothing. So I held onto it for a year. Then I listed it again at 50% over the old price. I was swamped with calls and sold it within 2 days. It was all perception. People wondered “what’s wrong with it”, when I had a low price.

    Reply

  8. JeffN1966 Says:

    I wonder if this will work when applying for jobs? I’ve been low balling my salary requirements in hopes to find a job. I got laid off in March. So much to learn….
    thanks for your site. It is really an inspiration!

    Reply

    • Ryan Says:

      It could definitely help set you apart from others. If you get the right employer that is looking not to save a few bucks, but hire the best talent you might get more attention with higher salary demands.

      I’ve had over 20 jobs in my life, and almost every single one of them was because of a recommendation from a friend or knowing the person hiring. My advice would be to do whatever it takes to establish a personal connection with the employers you are applying to. Best of luck!

      Reply

  9. Danielle Says:

    So true! I had a friend who was trying to get rid of her mattress, but when she listed it as free there were no takers on CL. I told her to put a price tag on it and she got a whole lot of offers!

    Reply

  10. sam Says:

    Great post Ryan! I’ve sold a lot of things on CL and pricing is a huge part of any success. The trick is to pick a good value and try to stick with it. I always have my asking price, which is ‘firm, cash only’ in the ads and then I have my fall-back ‘what will I take’ price. It takes quite a bit to get me to budge from my asking price. I always remember that line from Danny DeVito in Ruthless People: ‘A bad salesman always lowers his price.’
    Thanks for all the super information! Sam

    Reply

    • Ryan Says:

      I love it! Wise words. I rarely ever lower my price anymore, and never in person. If inventory gets a little big, I will discount a few things to get things moving.

      Reply

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