5 Profitable Pricing Strategies for eCommerce and Retail Businesses

 
Setting the right product price takes more effort than you might realize. If your products are priced too high, it won’t be long before you are belted out of the game. On the other hand, if your price is much lower than your competitors, customers will assume your product is inferior, and then too you will be out of the game. Thus, you need the right strategy to formulate the perfect price for your products to help you grow your business.
 

 
‘Pricing Strategy’ includes the methods businesses use to determine the charges for their products or services. To ensure your product pricing is correct and competitive, you need to do market research, collate consumer data, and do the calculations. However, despite all your efforts, every pricing strategy is not comprehensive or perfect, and hence you need to update it sometime depending on the market condition and consumer demand. In many cases, business owners prefer to keep it basic and simple by using set markups known as cost-plus pricing or retail prices suggested by manufacturers.
 
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You should build your strategy considering the market conditions and other factors impacting consumer behavior to have a competitive advantage in your industry.
 

 
An effective pricing strategy enables you to determine competitive pricing and provide your customers with the pricing comparison option. It ensures an amazing and seamless customer experience, which is one of the pillars of your success. After all, with the exponential growth of eCommerce and a huge paradigm shift in the dynamics of customer behavior, price comparison ability is a common ask. A well-formulated, strong pricing strategy will enable you to provide your customers with the reason behind your lower or higher price.
 
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Clubbed with an effective marketing strategy, your pricing strategy might help give a positive tint to the perceived value of your products and services.
 

 
So, now that we know how crucial it is to get your pricing strategy right, here are five profitable strategies you will find useful for your business growth trajectory:

• Cost-Based Pricing. This is a common pricing strategy, and many eCommerce merchants use this strategy to price their products during their initial days. This strategy mainly considers the business and analyzes how much consumers will be willing to pay for a similar product. It is derived by adding the cost of goods, all expenses incurred, and the profit you want. Adding up all these elements gives the selling price.
• Competitor-Based Pricing. Another relatively simple and common pricing strategy is setting your product price after market research on your competitors. During the study, find the lowest and highest price your competitors have set for a similar product. Then set your product price after doing the maths covering up your operational and marketing expenses.
• Consumer-Based Pricing. This strategy is also known as value-based pricing, a combination of cost-based and competitor-based pricing. The merchants consider the product cost, business expenses, and average selling price and then add the value they provide to their customers. This strategy enables you to set a reasonable product price without compromising your business profit. The most crucial element to consider is the Unique Selling Point (USP) you provide to your customers.
• Bundle Pricing. This pricing strategy is suitable for merchants in a highly competitive niche or to increase footfalls to your physical store. It helps increase eCommerce sales. The concept of this strategy is relatively simple. Create a bundle of complimentary products and then sell them at a reduced rate than their individual price.

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• Price Skimming. This is a concept in which eCommerce merchants create ‘exclusive offers’ or ‘limited edition offers’ to offer something scarce; thus making customers crave it. It aims to create an emergency in the mind of the customers and impact their purchase decision, as they believe that a particular product collection will run out soon. Sometimes merchants also use this strategy to reduce the price of a product for a limited period to boost the sale.

 
To sum it up, the right strategy is crucial to determine the price of your product. Too high or too low a price will likely affect your business and revenue. After all, your business can only thrive and grow if your products sell well. Always remember that there is no one-size-fits-all growth strategy, as every business is unique. Do thorough research and determine a pricing strategy that works for you. Keep doing market and competitive research from time to time to update your product price and stay ahead of the competition.
 
So, go ahead and take that extra step for your customers and keep them happy!
 

 
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