E- commerce Pricing strategies that online retailers should keep in mind
Trading online is the need of the hour but the subsequent competition that has risen due to a multitude of options is huge. Pricing undoubtedly is one of the major factors that determines what kind of product a particular client chooses.
Of course there are other factors involved such as the quality, customer service and so on, but the cost of the product is the primary factor and as an e-commerce development company, on needs to be aware of the strategies that can come in handy while pricing in order to ensure the best results.
The need for striking a balance
It needs to be determined strategically, so that the customers feel inclined towards investing with you as compared to your competitors. If your asking price is too much, you risk losing your customer to competition and the conversation gets cut short while if you keep it too low, you risk losses in the business. This is why a judiciously acquired mid-point needs to be determined. This helps in offering value to the customers, while helping you maximize your business profit through sales.
Here are some pricing strategies that come in handy for e-commerce business owners
- The classic profit based model
The most basic kind of pricing is cost-based, this focuses on making profit on sales. Considering all the costs incurred by you in the process of creating the product or service, the price is set with the amount of profit the seller aims to make. - Penetration based pricing
If you have had a new launch or are just starting out in the e-commerce industry, then Penetration Pricing model is one of the most ideal and significant model for you to put to use. The model includes initial sales of the product(s) at a lower cost, but only for a limited period of time. As soon as the products starts acquiring a substantial market share, the price can be increased to gain higher profits.
The motive here, is to attract a vast consumer group through the initial discounted prices and have them believe in your product so much that they’d be willing to buy it at a higher price as well. - Loss Leader
This is one of the most significant and popularly used pricing strategies in the e-commerce industry. For instance, let’s say you’re shopping online and find something that catches your eye, it is a bit pricey but is available a a huge discount. You add it to your cart, thinking you’re getting such a good deal and buy a lot of other items at discount as well from the same website. This strategy is used by businesses to lure in customers with discounted prices and have them buy multiple products at once - Competition based pricing
Another kind of pricing technique is where you analyse the market competition and compare what prices they are selling similar products or services for and set your own prices a bit lower. This is kind of a tricky slope especially for businesses that are just starting off in the e-commerce business, but is an essential strategy that needs to be kept in mind. - Economy based pricing
In this kind of pricing, the revenue is sought through an increase in the sales volume. This tends to work better when the products in question are priced low and the losses incurred can be made for through the sales volumes. - Anchor- based pricing
This is one of the oldest pricing techniques. Its where the original price is listed next to the original price of the product, and gives the effect of a good deal for the customer. Alternatively, the costlier products can be listed next to the cheaper ones, which will boost sale or both categories by bringing them to notice. - Bundling form of pricing
This type of pricing is when the customers are offered discounts in return for buying multiple products. It is a clever way of helping up the sales at your e-commerce store. It offers a better deal to the customers and promotes sales, but you need to be sure where to draw the line or you would end up incurring losses.
Having discussed these essential pricing strategies is it important to bear in mind that the industry and its dynamics will keep changing and there is need for trusting only the best with the strategizing for your e-commerce business
