Min order values
- Thread starter gibby
- Start date
This should be calculated based on your margin aspirations. If ordinarily you sell 5 units for a total of £100 making a profit of £40 then you have a margin of 40%.
If delivery costs you £10 then you drop your margin to 30%....pretty reasonable.
If you sell 1 unit at the same unit price above totalling £20 making a profit of £8. If delivery still costs you £10 then you will naturally make a loss.
So identify what your lower margin aspirations are, identify what your average margin achievements are across all your products. From there you can set a minumum order value and still turn a profit.
If delivery costs you £10 then you drop your margin to 30%....pretty reasonable.
If you sell 1 unit at the same unit price above totalling £20 making a profit of £8. If delivery still costs you £10 then you will naturally make a loss.
So identify what your lower margin aspirations are, identify what your average margin achievements are across all your products. From there you can set a minumum order value and still turn a profit.
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We have clients that use delivery charges as a mechanism to deter smaller orders - that is, the cost of delivery for sub-£10 orders is much higher than £10+ orders. In that way, they ensure they break even and encourage larger orders. By all accounts, it does appear to work.
We do have other clients where they simply don't allow checkout unless the order is a minimum amount and display a message accordingly. Again, that seems to work well for them.
It does also depend on the industry sector you are in and what your competitors are doing as to whether this approach might work for you.
We do have other clients where they simply don't allow checkout unless the order is a minimum amount and display a message accordingly. Again, that seems to work well for them.
It does also depend on the industry sector you are in and what your competitors are doing as to whether this approach might work for you.
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We have a minimum order value of £60. With shipping costs and vat, it comes to just over £80 - high enough to deter micro businesses and non trade customers, but low enough for new customers to be comfortable placing a small sample order. As far as we're concerned, anyone not prepared to spend £80, we don't want as a customer.
However, I don't see minimum order values working well for b2c sites. End consumers expect to be able to buy 1 item.
However, I don't see minimum order values working well for b2c sites. End consumers expect to be able to buy 1 item.
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That's an interesting question. We have a shop in a market where a high percentage of our competitors impose a minimum £10 but we do not get an excessively high number of sub-£10 orders.
There is also the value you attach to a satisfied customer (even if they do spend less than a tenner) who can be subsequently marketed to via a promotional newsletter.
There is also the value you attach to a satisfied customer (even if they do spend less than a tenner) who can be subsequently marketed to via a promotional newsletter.
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