Pricing New and Pre-Owned Products

The world of commerce has changed considerably with the advent of online shopping. Internet savvy consumers are able to compare prices through the click of a mouse or a touch on the screen. Therefore for many mass market manufactured items sold new on the internet, those that move tend to be the lower if not the lowest price ones. This is common sense since the consumer could easily search for the item and the particular brand online. Therefore the strategy for anyone selling new mass market manufactured products on the internet should be to quote the lowest selling price that could still generate a reasonable profit.

This strategy does not work for new non-mass market manufactured goods like luxury products. In fact, quoting lowest prices on such items raises questions about their authenticity. For instance if one is selling new luxury handbags, the likely strategy should be to open a brick and mortar store in a tony shopping district. Such a store would allow for opportunities to pamper the consumers with a level of service to commensurate with the high prices.

For certain other products like bread, buns and pastries produced by bakeries, pricing depends on the target market. Those targeted at the masses would tend to price these products low to appeal to the cost conscious. On the other hand, high end bakeries could charge premium prices by positioning their products as being made from superior ingredients. Even if sold online, there is no way that consumers could do a direct comparison with competing products since each bakery could claim certain exclusivity.

In the case of pre-owned or used goods, pricing is a bit more nebulous. A particular item selling for $X could not be directly compared with another if the specifications are different. Even if the specifications are the same, it does not necessarily validate a direct price comparison. This is particularly so if the ages of the pre-owned product are different. Also, even if the products are exactly the same in terms of specification and age, they still could not be compared directly. This difficulty in comparison could be due to their actual physical condition. One in great physical shape would command a higher price than another in poor physical condition. Finally sellers could charge different prices for deliveries or provide incentives like an additional item that comes free with the purchase. The prices of comparable products with similar specifications and age could be used roughly as a guide. Unfortunately for sellers, the price equilibrium tends to tilt towards the price of the worse items offered. This makes it more difficult to command higher prices for better quality items.

The pre-owned goods market has a way of balancing the price based on supply and demand. Items in short supply and with high demand would see prices creeping up. On the other hand, those with high supply and low demand would see prices being dampened. Unlike newly manufactured products, the supply of pre-owned goods could be relatively unpredictable. On the other hand, demand tends to be relatively more predictable. Thus imbalances could occur resulting in price spikes at times.

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