As they say, Profit or Perish. If you thought setting up a Shopify Store was hard enough, here’s your moment of truth: making profits from it is not easy either. Apart from balancing various operational hassles, you have to keep an eye on tactics that help you grow your profit margins too. According to Konigle’s Sellingnomics study on Profit Margin, they explain how a Shopify store can improve its profit margins.
Pricing is important
Pricing is the most important lever a Shopify store has to improve its profit margins. Being able to increase prices by even 1 % while keeping order count stable allows almost an 8% increase in profit margins. According to the Sellingnomics report, being able to manage transactional pricing well is one of the most actionable ways to increase profit margins as a Shopify store.
Here’s a summary of key learnings from their report.
1. Calculate the unit costs of SKUs properly that you are selling.
According to Konigle, they observe that almost 65% of the inventory of Shopify stores does not have costs calculated. If you are not calculating your inventory costs, then it is impossible to accurately price your products profitably. There are many reasons for it, and using Konigle, you can quickly calculate your inventory costs.
2. Over-discounting markdowns
Best Shopify product bundle apps are a decision to enable users to buy several products together and get a discount and thus sell more. In retail, deadstock kills a business. Hence many Shopify store owners overcompensate and over-discount products, as they lack an easy way to identify slow-moving inventory and gradually discount rather than discounting all at once. Here’s where the Konigle deadstock prevention tool helps to automate running profitable markdowns.
3. Selling too cheap
Many Shopify stores price their products too cheap, this is because they do not have an easy way to track competitor stores and understand which products are too cheap or expensive. You can automate the process of identifying products that you’re selling too cheaply using Konigle and quickly adjust prices.
4. Scheduling price changes
Not being able to revert back discounted prices to their original non-discounted prices after the promotion ends is a sure way to erode your profit margins. Managing promotions on Shopify Store is time-consuming and error-prone. Using Konigle’s Bulk Price Editor, you can expertly manage promotions. It is the best bulk price editor for Shopify we have seen.
5. Dynamic Pricing on Multi-Channel Stores
According to the Sellingnomics study, over 33% of SKUs on a typical dropshipping Shopify Store unintentionally have their prices changed due to dynamic pricing across multiple sales channels, dropship apps, and more. With Konigle’s one-click automation, you can prevent unintentional price changes on your Shopify Store. The stores that used their automation have shown almost 7% improvement in profit margin.
6. Unable to set prices with respect to cost
Well, if there isn’t an easy way to set prices while having cost visibility, an online seller would often end up setting sub-optimal prices, directly impacting profit margins. In Konigle’s profit margin calculator tool, you can set prices and know your target costs for a product. Even better are their smart filters that can filter products being sold at a loss, and you can quickly fix those faulty prices.
7. Analyze your promotions
Not every sale works, not every product sells well on a promotion. Yet many Shopify Store owners never analyze a sale. Because it is time-consuming and difficult to analyze each SKU, Konigle automatically generates a before and after report for each promotion that you schedule for your online store; this helps to identify promotions that help and those that do not.
Bonus Tip: Fix orphan pages for better SEO
Well, another way to improve your profit margins is to reduce costs, and one big cost is running paid advertising. With good SEO, you can get free traffic that reduces your costs on advertising. The most basic SEO tactic is to prevent Orphan pages on your Shopify Store, and surprisingly due to these issues, most Shopify Stores suffer from Orphan Pages on their store. Konigle’s Orphan Page tool fixes this with a click of a button without needing a developer.
Though there are many more ways to grow the profit margin of your Shopify Store, we found these 7 or should we say 8 methods a must-do for a store of any size as it does not need you to spend a lot of time; in fact, most tactics need 5 minutes or less.
As the kind folks at Konigle say – Happy Profits! Hopefully, these tips will help you make more money off your Shopify Store.