Online platforms must now, more than ever, have a solid pricing strategy for eCommerce supported by an effective pricing algorithm to provide their customers with rapid, accurate, and optimal prices. Due to inflation, businesses are drastically changing their pricing methods to keep up with growing labour, input, and logistical expenses, wreaking havoc on companies and running at their highest levels with the outstanding assistance of Digital Marketing Services.
Your online store can succeed or fail based on your pricing structure. Do you lower your prices to remain competitive at the expense of profits? Or do you raise your prices at the risk of losing out on more potential customers?
Your eCommerce firm may expand and increase revenue and profits by using the proper pricing strategy. Although determining the price of a product might be challenging, there are techniques to find the best pricing approach for your company.
We’ll discuss the eight most popular pricing strategies in eCommerce utilised by eCommerce firms in this article, as well as why you need a robust and full-proof eCommerce pricing strategy.
What is a Pricing Strategy for Online Sales?
A well-planned and robust eCommerce pricing strategy helps identify how to appropriately price things to improve sales and profits while remaining top of the competition. Several eCommerce pricing tactics are employed depending on the sort of goods offered, product demand, and competition to monitor how to boost eCommerce sales.
Your online store can succeed or fail based on your pricing structure. Do you lower your prices to remain competitive at the expense of profits? Or do you raise your prices at the risk of losing out on more potential customers?
Your eCommerce firm may expand and increase revenue and profits by using the proper pricing strategy. Although determining the price of a product might be challenging, there are techniques to find the best pricing approach for your company.
We’ll discuss the eight most popular pricing strategies in eCommerce utilised by eCommerce firms in this article, as well as why you need a robust and full-proof eCommerce pricing strategy.
Why Does an eCommerce Company Need a Customised Pricing Structure?
Robust eCommerce pricing strategies refer to the methodology or process used to determine the fair price for a good or service. It assists companies in setting prices that take into account customer and market demand while maximising profits and shareholder value.
But let’s be clear: There isn’t a universal e-commerce pricing model that works for all companies. Because every operation is unique and has its own attributes and characteristics, businesses must test out numerous approaches to resolve which ones are most effective for them.
The revenue targets, marketing goals, target market, brand positioning, and corporation product characteristics are all considered in an optimal strategy. Additionally, it will be affected by outside variables, including customer demand, rival prices, and general market and economic developments. A careful balance must be between pricing goods high enough to maximise returns and low enough to draw customers in and fulfil their expectations.
The actual cost per transaction and initial investment may increase as your organisation expands, and expenditures could also increase dramatically. To scale your firm, you need an e-commerce pricing strategy. Ecommerce companies can utilise a variety of pricing techniques that won’t have a negative impact on their long-term financial results. Excellent SEO of an eCommerce website can also assist a company in the earning of good revenue and for that a company can avail the assistance of an expert SEO Services Reseller. and a powerful email marketing guide.
If you continue to analyse and enhance your pricing strategy, your eCommerce firm may have the potential to increase revenues even if it is already lucrative. Your company needs the means to stand out from the thousands of other eCommerce firms, and the appropriate price and shipping strategy can do that. For the realisation of this one requires an elegant & tech-stack eCommerce website which is a significant segment of website design services.
Outstanding Pricing Strategy for eCommerce
Cost-plus pricing
When using the cost-plus pricing strategy, also known as “markup pricing,” “breakeven pricing,” or “cost-based pricing,” a product’s price is increased by a specific percentage margin in order to generate profit.
Because of its relative simplicity and ease of computation, cost-plus is one of the most fundamental and straightforward pricing strategies for new and smaller eCommerce firms.
If the production cost of an article is $10, and you wish to make a good profit from it, you have to fix its selling price after considering the average shipping costs for online shopping, acquisition costs, various taxes, and other expenses. You can expect good revenue if you can sell the product for $20.
The cost-plus pricing approach is well-liked since it is uncomplicated as long as your charges are higher than the actual cost per transaction. You may immediately get assistance from your accountant or finance team in setting up a cost-plus tracking system to monitor your company’s performance with the help of these online retail pricing strategies.
Pricing Depending on Competition
Competition-based pricing, which is most frequently applied to products, is predicated on providing higher prices than your rivals. This entails assessing your prices concerning the cost of comparable goods supplied by your competitors across all channels and adjusting your prices as necessary.
By enticing customers with lower costs, competition-based pricing can help you outperform the rivals. This is a great marketing tactic if you want to attract budget-conscious clients who are willing to give up brand awareness in order to save funds.
Value-based Pricing
Value-based pricing focuses on figuring out the highest price a customer will pay for your goods. Customers place a higher value on quality and “fairness” than anything else. Customers like this need to be aware that the item you’re offering is of the highest calibre, can be obtained legitimately, is environmentally friendly, and is challenging to locate.
Due to the perceived worth of the product, value-based pricing can be used for all goods. Understanding your products’ potential is aided by value pricing. If it turns out that customers are willing to pay more than you are now asking, you might introduce a new product range at a premium price.
Price Skimming
Price skimming is a tactic where the original cost of a product gradually drops over time. Price-skimming is common for tech goods that depreciate in value or become obsolete as new technology is developed. Older product models are less expensive to acquire as more recent models become available.
A group of consumers referred to as “early adopters” buy technology devices, including smartphones, televisions, laptops, and game consoles. These clients are prepared to shell out more money for the newest and best products.
Price skimming is an innovative marketing tactic for companies that sell in-demand goods, cutting-edge technology, or seasonal merchandise. Customers will inevitably desire newer products as time goes by, but you may still profit by slashing prices on items from the previous year to draw in budget consumers.
Loss-leader Pricing
Selling things at a loss is the primary goal of loss-leader pricing, which aims to persuade buyers to purchase a higher-priced commodity. When clients purchase additional goods required to make the sold product effective, the cost of the loss is covered (e.g., a printer and printer ink, a video console and video game, etc.). The additional goods may be bought at the moment of the initial transaction or a subsequent date.
Loss-leader pricing encourages customers to buy the complimentary item in addition to the highly discounted thing, where they may be inclined to add more items to their basket since they already feel like they are getting a deal.
Dynamic Pricing
Dynamic pricing emphasises flexibility; prices are never fixed and may vary at any time as a result of ongoing shifts in demand.
Sometimes, “surge pricing” is used to describe dynamic pricing. When there is a spike in demand for rides in the area—due to inclement weather, major events, etc.—apps like Uber and Ola use dynamic pricing.
Premium Pricing
The cost of a product conveys its value. Premium pricing is a method for determining the cost of valuable, opulent, or expensive commodities. Premium pricing is used to indicate that your brand or products are well-known or denote status. Designer clothing and accessories are the best examples of this.
Due to the fact that you are only focusing on customers who can afford your items, premium pricing might be a successful strategy. As you aren’t focusing on the general market with improved targeting, your ad expenses are cheaper.
Anchor Pricing
Anchor pricing gives customers a price point to compare things against while they are shopping around (the anchor). For instance, while conducting a discount promotion for a product, your website can display the original price next to the discounted price. Even though a product usually costs $75, an online store may offer it as “( $100 ) $75” to show the customer how much money they are saving.
Customers seeking a bargain or a rebate are attracted by anchor pricing. It may also make you feel rushed. Customers will feel pressured to purchase a product immediately or risk missing out on an offer by citing the higher anchor price point.
Hope, this article will significantly assist you in fixing the pricing model of your products or services for eCommerce business. If you’d like more information about the best eCommerce platforms for SEO and other digital marketing services, please get in touch with us.
Frequent Asked Questions
Relying on the sector and business model at hand, many pricing models are often utilised, including value-based, competitor-based, cost-plus, and dynamic pricing strategies.
The most eminent five levels of strategic pricing are cost-plus pricing, competition-based pricing, value-based pricing, price skimming and dynamic pricing.
Depending on your company strategy for pricing defers. We advise value-based pricing for a variety of businesses, including subscription and SaaS businesses.
- Establish your company's objectives.
- Analyse the market prices thoroughly.
- Analyse your potential consumers.
- Describe your industry's competition.
- Make an operational plan and pricing structure.
