Recently, global costs have encouraged many online retailers to increase their prices.
Perhaps you’re considering taking the same step. If so, you’re probably wondering whether you’re doing the right thing or if there is another way to price your products.
Read on to learn about the different pricing strategies for your eCommerce store.
You’ll discover how things like eCommerce competitive analysis and psychological pricing can provide you with a more flexible approach.
Pricing Based on Supply and Demand
While supply and demand isn’t the only factor for pricing, it is an essential economics lesson when setting prices for your products. It’s how many industries operate, like crude oil, for example.
The basic rule to grasp is this: high demand and limited supply means you can charge higher prices – and the reverse is true.
You can adjust your supply to affect your market pricing strategy.
For example, you could offer a limited edition version of an existing product. If that limited edition proves popular, you can raise your prices.
Cost Vs. Value-Based Product Pricing
Aside from the economics of supply and demand, you can use other approaches to setting a price.
A common approach is to work on a cost-based price. This option is popular when you operate in a price-sensitive market.
A cost-based method involves taking the cost of a product, adding on extra to cover your profit margins, and using that as your price.
In contrast, you can ignore the cost of the product and go for a price based on the perceived value. This option is more prevalent in luxury markets where you have a unique proposition.
Here, you’ll price based on what it’s worth to the customer. Premium coffee from luxury coffee shops is an excellent example of value-based pricing.
Marketing teams often use human psychology to sell. And it works for pricing strategies.
Psychological tactics can help you sell products at a specific price. For example, you can pitch a product for €9.99 instead of €10, which customers perceive as better value.
Another popular option is bundling goods together when selling products online. A bundle’s presentation seems more valuable to a customer than buying all those goods separately.
Discounts are a common form of psychological pricing. Offering a time-limited discount seems like an offer that’s too good to turn down, and people feel they are getting a bargain.
Providing free delivery follows the same principle, which is why it’s popular.
eCommerce Competitive Analysis Dynamic Pricing
The upside of eCommerce is that platforms make it easy to change prices. You can use this to your advantage by trying dynamic pricing that reflects your competitive analysis.
Here, you regularly change what you charge depending on competitor pricing. By using competitive analysis tools to monitor other pricing in the market, you can always maintain a reputation for excellent value.
Figuring Out the Perfect Pricing
There is more than one way to price your goods. Don’t feel you have to opt for the lowest figure when running an eCommerce competitive analysis. Use these strategies to help you find a price that also brings you profits.