The point of diminishing returns is where so many eCommerce businesses go to die. It’s the invisible trap that sneaks up on you when you think you’re doing everything right; pricing competitively, driving more sales, scaling up—only to realize you’re somehow making less money despite selling more. Yeah, it’s a cruel joke.
Here’s how this disaster unfolds. You start selling a product, and to stay competitive, you price it low. Makes sense, right? Lower prices attract more customers, and more customers mean more sales, which should mean more profits. Except that’s not how business actually works, because every single sale comes with hidden costs that pile up like an avalanche you didn’t see coming.
The Costs You Don’t See Until It’s Too Late
First, there are the obvious costs; manufacturing or sourcing the product, shipping, payment processing, and platform fees. Then, there are the sneaky ones; advertising, email marketing software, website hosting, and your time. And let’s not forget customer service, refunds, and dealing with those delightful people who want to argue over a $10 purchase like it’s a Supreme Court case.
So here you are, moving more products than ever, feeling like a business genius, until one day you actually run the numbers and realize that despite all these sales, your bank account still looks like it just got out of a bad breakup. You’re running a high-stress hamster wheel, where the only way to make more money is to sell more and more and more just to cover costs.
Cheap Prices Attract the Worst Customers
And here’s the real kicker. When you price too low, you attract the worst customers. The ones who expect everything for nothing. The ones who complain about shipping costs, demand constant discounts, and will abandon you the second they find something cheaper. These bargain hunters don’t care about your brand, your quality, or your service. They just want cheap. And trust me, cheap customers are the fastest way to burn out.
Meanwhile, businesses that charge what their products are actually worth get to work smarter, not harder. When you price correctly, you don’t need to sell a million units just to survive. You make real profit per sale, which means you can afford to invest in better marketing, higher quality service, and growth that doesn’t feel like a stress-induced heart attack.
The Magic Number: $35
So let’s talk about that magic number: $35. If your average product price is below that, you’re playing a dangerous game. Why? Because by the time you factor in everything from transaction fees to your own time, you’re likely making peanuts per sale. And at that point, why even bother? Raising your prices isn’t just about making more money, it’s about making sure your business doesn’t collapse under its own weight.
But wait, I know what you’re thinking: “If I raise my prices, won’t I lose customers?” Maybe. But here’s the truth: the customers you lose were never worth keeping. Let them go. You don’t want to build a business that survives on price-sensitive, discount-chasing buyers. You want customers who are willing to pay for quality, reliability, and value. And the best part? Those customers complain less, return less, and actually appreciate what you offer.
Cheap Feels Good, Quality Keeps Customers
And let’s be honest; how many times have you personally bought something just because it was cheap, only to regret it later? Cheap feels good at the moment, but quality keeps customers coming back. Your job isn’t to be the cheapest option, it’s to be the best option at a price that makes running your business worth it.
Stop Playing the Price Game and Start Making Money
So here’s the bottom line: if your pricing strategy is based on selling huge volumes at razor-thin margins, you’re on a sinking ship. Stop competing in a price war you can’t win. Raise your prices to where they should be, focus on value, and actually start making money. Because at the end of the day, profitability beats popularity every single time.
Here are some actions you can take right away.
1. Run the math before you price anything; like, actually do it.
No more random guessing or “Well, my competitor is charging this, so I guess I’ll do the same.” Sit down with a calculator, a spreadsheet, or even a napkin if you have to, and add up every single cost involved in selling your product. Not just the obvious ones like platform fees and shipping, but the sneaky ones too; marketing, refunds, customer service, even your own time. Once you have that number, set your price above it. If your profit per unit makes you feel like you just got mugged, raise the damn price.
2. Cut out the cheapskates and start selling to people who actually value quality.
If your inbox is full of customers asking, “Can you do a discount?” or “Why is shipping not free?” you’re selling to the wrong crowd. Cheap customers are like bad relationships; they drain your energy, waste your time, and never appreciate what you do. Instead of bending over backward for bargain hunters, position yourself as the premium choice. Better branding, better product descriptions, better service; make it clear you’re not the dollar store of your niche.
3. Test raising your prices.
Seriously, just try it. I know, it’s terrifying. You’re convinced the second you bump up your prices, customers will flee like you just turned their cart into a crime scene. They won’t. In fact, you’ll probably find that people buy more when they perceive value. Run a test. Pick a product and raise the price by 20%, then watch what happens. Worst case? You lower it back down. Best case? You realize you were leaving money on the table this whole time.
4. Stop trying to sell everything and start selling the right things.
If your store looks like an online flea market, you’re doing it wrong. Instead of offering a hundred cheap products, focus on a few high-value, high-margin ones. The less inventory clutter you have, the easier it is to actually market and sell what you’re offering. And bonus? Your customers will trust you more because you actually look like an expert in your niche instead of some random warehouse that stocks whatever is trending this week.
5. Rethink your entire business model if you’re stuck in the “sell more to make more” trap.
If your whole strategy is “I’ll just sell a ton of stuff and somehow it’ll work out,” you’re setting yourself up for failure.
Real businesses don’t survive on volume alone; they survive on profit. If you have to sell 1,000 units to make the same money as someone selling 100 units, you’re working ten times harder for the same result. Step back and ask yourself: Would I rather sell a few high-value products at a great margin, or grind myself into dust moving cheap inventory? The answer is obvious.
There you have it. Five real steps you can actually take today to escape the race-to-the-bottom pricing trap. Raise your prices, attract better customers, and stop making your life harder than it has to be.
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