“Pricing is what you pay and value is what you receive.” – Warren Buffet, American Business Magnate and Investor.
Talking About 5 Pricing Strategies To Optimize Your E-Commerce Sales, The pricing strategy is defined as a methodology, which the retailers, manufacturers, and other business entrepreneurs use to set the right price for their products and services. The primary aim of a pricing strategy is to boost sales and maximize profits.
However, setting an appropriate value of the product can be exciting as well as a challenging task. Whether you are a small business or a large enterprise, you have to do your homework, considering various factors including production cost, revenue goal, and competitor pricing.
Please pay attention to these couple of stats below-
- 87% of the customers say that the price is one of the most important determinants when they are making a purchase.
- More than 80% of the consumers always check the price online before buying any product or service.
Why Pricing Strategy Is Important
Pricing is one of the most essentially potent vehicles when it comes to increasing your e-commerce sales. If you are successful in getting the price ‘just right’, you can unlock a myriad of opportunities to generate potential revenue.
Allows You to Get the Driving Seat
Whether you are selling your products on top marketplaces like Amazon and eBay or on your own e-commerce site, you need to compete with tens of millions of sellers. Winning over them requires a well-defined pricing strategy that helps you to monitor the competition and adjust the prices accordingly.
Securing Products from Erosion
At times, you may have to come across a situation where the price of the product dips all of a sudden creating a big ripple effect. However, staying abreast of MAP violations allows you to respond before lower-than-advised prices start influencing listings and marketplaces.
Prevent Price Disparity
You are also required to remain compliant with the marketplace agreements to prevent price disparity. Failing to do so can lead to account suspension and withholding of money. But a strong pricing strategy can keep all these issues at bay and keep your sales high.
Stay Ahead of the Competition
Following pricing strategy practices lets you stay ahead of seasonal and marketplace competitions and get your products in the front row to attract customers.
Adjusting Real-Time Demand
Adjusting the product prices based on the latest purchasing trends will always keep the customers interested. It also keeps your inventory moving, irrespective of any season.
Let’s now define those result-oriented e-commerce pricing strategies that help you gain a lead in the marketplace.
- Setting Up Specific Price of the Product
With customer interests drifting constantly, you need to set up specific prices of the product. Nowadays, consumers usually focus on logic and this pricing strategy will work effectively.
For example, you can tag the price of a product at $105.28 rather than $99 or $100. A study conducted at the University of Florida highlights the customer’s viewpoint regarding round-off prices. Most customers think that rounded prices are relatively higher. Thus, they are less likely to click on the CTA button.
The specific pricing strategy will work effectively if you are selling computer and technology-based products. The customer does not make the purchasing decision based on his emotions but assuming that the price has been tagged taking into account the product’s parts.
- Fewer Syllables Means Lower Prices
Let’s discuss a very interesting fact related to the general perception of the customer. It says that people view the prices of the product to be lower if it contains a few syllables.
Clark University conducted research, which revealed that even if the prices of two products are of similar length, phonetically longer prices seem to be higher.
For instance, let’s take two numbers; $27.82 and $27.16. Although $28.16 is higher in value than $27.82 it has 5 syllables in comparison to 7 syllables. It means $28.16 is considered a lower price despite a higher value. Quite strange, but it is true.
This type of pricing strategy fits best for online apparel or accessories stores. The reason is that unlike the case above, customers make an emotional purchase. So, you can round off the price such as $20 or $30, which contains few syllables. Since they can process the numbers quickly, the decision to buy the item also accelerates.
Moral of the Story: Reduce the syllable count to drive more customers into your store.
- Attracting Customers with the Loss Leader
Suppose you owe an online restaurant and sell all barbeques at a much lower price such that you have to incur a loss on the food items. However, did you still decide to pamper the taste buds of your customers?
So, what is that pricing strategy that is driving you to offer products at much lower prices? Well, the answer seems to be interesting. It’s known as a loss leader.
Many of you may not have heard about the term yet. Well, it’s a pricing tactic where you can reap huge profits on all other tasty steaks such as salad, wine, and other products that customers buy with the product.
Talking About 5 Pricing Strategies To Optimize Your E-Commerce Sales, In fact, you will be surprised to find that the world’s biggest e-commerce website Amazon uses this pricing strategy perfectly to earn big profits. Statista reports that it’s global Prime Day sales reached $4.19 billion in 2018.
Amazon has increased the number of its prime members on a specific Prime Day Sale, allowing it to make up for the loss.
- Making Use of the Visual Cue for Sale Products
Do you also think that displaying a cool vibe in combination with minimalistic colors holds more significance than basic conversion strategies?
The fact is that it will not always work.
84% of the marketing and tech professionals are of the view that e-commerce websites with the design-centric approach can outsmart their competitors. Therefore, you have to focus on utilizing your design optimally.
You can make use of visual contrast to distinguish the sales and the original prices with color or size. For instance, you can use a red color to highlight the drop in price. Also, indicate the reduction percentage in the red color. It is an indication for the customers that they should not miss the offer.
- Showcase the Registered Retail Price (RRP) of the Product
The idea behind adopting this pricing strategy is to send a clear message to the customer to see what they have been paying.
You can convince your customers to buy the product by focusing on the bare difference between registered retail prices and offers at the competitor’s website.
Talking About 5 Pricing Strategies To Optimize Your E-Commerce Sales, However, you need to adopt this strategy with caution because you are selling your items at a price much lower than your competitors. You can use your products with confidence if their price is lower than the RRP.
Summing It Up
Aside from these five important pricing strategies, you can also implement other tactics such as displaying an expensive item on the left, showing the equivalent price on a daily basis, and offering similar products at slightly different prices.
