What is behind the public price of a product?

When you buy a product, you are logically sensitive to its price, whether online or in a physical store.

Sometimes it is used as the primary criterion, at the expense of utility, longevity, and the real value of the object. For example, pay periods, games-competitions, picking up many participants simply because this is free.

But if one is sometimes challenging to original products whose price cannot be estimated by oneself, as unique, then it is difficult to see it clearly and make an informed purchase decision.

In this article, we will see what is behind the public price of a product you buy online.

The cost of production

A more or less significant part of the final price, this cost often attracts all looks when trying to estimate the value of a product. Yet it is very insufficient and sometimes even not significant.

If you tend to estimate that the pizzaiolo from the corner – charging €12 a pizza with €1 cheese on it – is made a pactol on your back and multiply its investment by 12, you are probably very far from the count, and this is all the more true in online trade.

The cost of production is very variable from the final price, it can be of 25% of the price, like 75%, and that depends on other factors.

The cost of delivery

Very often underestimated, because having disappeared from the landscape in favor of the “free book”. Delivery costs are now often directly included in the public price, and even when not, the rate is often a stake that does not reflect the total cost of the shipment.

This practice, although it has allowed customers to quickly know the actual amount of their purchase, can hurt our vision of the fair price.

Nothing is free in this low world. Everything is atoned, good as bad, and it is paid sooner or later. Good is much more expensive.

Louis-Ferdinand Céline

Nothing is free, if the delivery is free for you, it is paying for someone else (the seller)And often, we don’t realize how much it costs.

Once again very variable, the smallest package sent directly into mailbox costs between €5 and €10. For a package between 1 and 2kg, you have to count between €9 and €15..

VAT

VAT (Value Added Tax) on items sold online and commercially is fixed in France at 20%, that is to say that if you want to draw €100 from your product, you will have to set its public price at €120.

It is often forgotten, but the price displayed is not the amount that would land in the seller’s pockets, when the sale made it is already liable for a large part of the amount cashed.

The Alas

Returns “free”, VAS, defect rates, lost or damaged packages... Are so many hazards and requirements for which the customer absolutely does not expect to make the fees. We expect this service from the seller, and of course free of charge.

Operating costs

An online merchant is subject to a number of fees, for example, when you pay in a bank card or by PayPal at an e-commercer, he or she must pay about 3% fee to capture your payment on its online shop.

Out of its online shop, if the product is offered on a marketplace like the FNAC or Amazon for example, these fees will be around 15%.

Although there are others, the second cost that comes to mind is the cost of “acquisition”. If you have fallen on the website in question and trusted him, it is not by chance, the e-commercer had to rDouble with effort or investment (often both at a time) so you can find it. Thus, when he wants to offer a product, the e-commercer must also know how much it will cost him to get people to find him. Very often neglected, however, it is one of the most important costs unfortunately.

In summary

Imagine buying a product weighing 2kg on the line at a price of 120€ from an e-commerceant, yet costing only 30€ to make, here is where your money goes and how this final price can be justified:

• Production : 30€
• Issue : 12€
• VAT : 20€
• Aleas : 5€
• Sales expenses (marketplace) : 18€
• Advertising : 15€
• Total : 100€

For a product charged €120 and cost €30 to produce, the seller actually earns little more than the state or than the market place. But that can be seen positively! This transaction actually pays a whole chain of people, from manufacturer to delivery, through intermediaries, every actor who brought you value is paid for his work. Note that we did not discuss development costs, possible wages, ecological costs…

It can then be thought that all the work of e-commercer is ultimately to reduce these intermediaries, in order to bring maximum value to the end customer and improve the value-for-price ratio... but this would be lacking consideration for the work of deliverers for example, who often deserve to be treated better than they are. We often complain about delivery services, but do not want to pay for, on either side. While transporters sometimes seem to us to be dysfunctional, it is often because they do not realize that their work is so worth paying, and that they are too often not considered.

How to choose?

When you want to make a purchase at an e-commercer, and want to know if the price is fair, Open your mind.

Do you know how to deliver, how well do you do? If so, it is likely that the carrier is paid correctly.

If possible place orders live on the shopkeeper's site and not on a marketplace, if the e-commercer tries to offer the same price everywhere, it is at the expense of him. Other times, the direct price is lower, and the e-commercer will be just as much paid, it’s win-win!

For example, Bamboo Electronics has a bamboo wooden keyboard and mouse is offered at 10€ cheaper on the online shop than on Amazon for example. The share of the brand remains the same while allowing the customer to pay cheaper.

Keep in mind that your purchases have a real impact on a whole chain of people, and on their lives. So c’est à vous de choisir, to pay a delivery rate, to pay each actor properly for his work, it is the buyer who has the option to influence decisions and not the other way around. Beware of very low prices because they are bound to fish to pay one of the actors at its fair value... Like very high prices, when the distribution of the amount seems uneven to you among the actors.

In the end, many of us agree to pay a slightly higher price, if the price is fair, and pay the chain of people who contributed to it correctly.

Remember that it is our choices, our demands, that shape the way e-commerce works. It is then appropriate for everyone to be aware of the formidable human chain set up so that our order comes to us, and to choose the brands and actors that seem to us to pay the best for this whole chain.