How do I compare two prices to see which earns more?
Run one price for a few weeks, then another, and compare total profit instead of order count, because the price with fewer orders can still leave more money in your pocket.
You are not sure whether your kurta set should be Rs 500 or Rs 600. Friends say lower sells more. Your gut says people will pay for quality. Instead of arguing, you can test it and settle the question with one comparison: total profit, not number of orders.
The comparison in one example
Say a product costs you Rs 300 to make and deliver. You try two prices over two equal periods.
- Price A is Rs 500. You get 40 orders.
- Price B is Rs 600. You get 30 orders.
Profit per order at A is Rs 500 minus Rs 300, which is Rs 200. Total profit is 40 times Rs 200, which is Rs 8,000.
Profit per order at B is Rs 600 minus Rs 300, which is Rs 300. Total profit is 30 times Rs 300, which is Rs 9,000.
Price A looks busier. It brought Rs 20,000 in sales against Rs 18,000 for B, and 10 more parcels to pack. But B leaves Rs 1,000 more in profit, and you did less packing, less courier handling and fewer chances of a return. In this case the higher price wins.
Make the test fair
A price test is only useful if the two periods are comparable. A few habits help:
- Run each price for the same number of days, ideally a full week or two, so weekends are counted in both.
- Do not test during a festival week against a quiet week. The season will drown out the price effect.
- Keep ads, posts and photos the same while you test. If you change three things at once, you will not know which one caused the change.
- Count profit after the costs that move with each order, such as shipping, packing and payment fees. If higher priced orders pay a larger fee, include that.
If you have a small number of orders, be careful. A swing from 40 to 30 orders might be noise. A couple of days of rain or one big Instagram share can do that. Treat a small test as a hint and repeat it before you change everything.
Watch what else changes
Profit per order is not the whole story. Think about:
- Returns. If the higher priced version raises customer expectations and returns go up, your Rs 9,000 shrinks. cost-of-a-returned-order-step-by-step shows how to count it.
- Repeat buyers. A price that attracts only bargain hunters may bring people who never come back.
- Cash. Fewer orders at a higher price means less stock to buy and pack for the same profit, which is easier on cash.
When the lower price wins
It can happen. If B had only 20 orders, profit would be 20 times Rs 300, which is Rs 6,000, and A at Rs 8,000 would win. The test is the point. You are not guessing which direction is right, you are letting your own shop's numbers tell you.
A simple routine
- Write down the cost per order, including shipping and packing.
- Pick two prices not too far apart, for example Rs 500 and Rs 600.
- Run each for equal time and keep everything else steady.
- For each, multiply orders by (price minus cost) and compare.
- Keep the winner, and test again later with a third price if there is room.
If you want to know how far you can raise a price before it hurts, simple-price-elasticity-check-for-sellers shows the break-even drop in orders. And if you are still setting a first price, pricing-your-products-when-you-are-just-starting is a good start.
A good price is not the one that gets the most orders. It is the one that leaves you the most profit for the work you put in.