The act of pricing your online products is among the most important tasks a business owner or manager could do. Using an effective pricing strategy will require some trial and error for some, as well as an instinctive feel of how you wish potential customers will perceive your products and brand.
Learn about three common pricing strategies used for online retail to get a sense of how you could price your products better.
This involves setting a price according to what competitors charge for products similar to yours, which in turn leads to a small gap between profit and cost. However, you should first monitor competitor prices with PriceManager to come up with a competitive, yet profitable price for your products.
For example, a retailer of computer-related products could choose to sell hardware at a relatively lower price comparable to their competitor’s prices and sell software products at a higher cost to obtain a sale that will consequently lead to a potentially positive value for customers.
This strategy entails pricing products to attract customers, such that it should consider a thorough understanding of value or a product’s perceived value. It is usually best for products with a significant emotional aspect or those in a controlled setting. The cost of the product’s production, tariffs, shipping, as well as other related expenses usually suggests how vendors and their competitors price their products. With value-based pricing on the other hand, pricing should reflect how much value customers place on a product.
Also known as keystone pricing, this strategy involves marking up product prices on top of the product’s wholesale value. This is typically utilized for low, but in-demand inventory products, high, but slow-moving inventory products, and when retailers have significant handling and shipping costs. This pricing strategy makes certain that you could implement a substantial and consistent profit margin.
An effective pricing strategy is an excellent advantage for your online store. There are other pricing strategies aside from the three detailed above, so make sure to do your own due diligence first to determine which one is best for your specific goals.