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Top 10 Crucial E-Commerce Pricing Techniques to Outperform Your Competition

The realm of internet commerce is expanding daily. There are between 12 and 24 million internet companies worldwide at the moment.   T...

E-Commerce Pricing Techniques

The realm of internet commerce is expanding daily. There are between 12 and 24 million internet companies worldwide at the moment.


The market is fiercely competitive because there are so many eCommerce websites already in existence and more popping up every day. To draw in the audience and convince them to become consumers, businesses need to become more aggressive with their marketing efforts.


After you have successfully drawn potential clients to your website, the difficult phase will start for you: persuading them to add items to their carts.


The visitor may be persuaded to add items to his cart by your products, photos, and attention-grabbing descriptions, but what will be the final factor in his choice to buy?

Put yourself in the position of your clients and consider what might motivate you to add items to your cart.


Good images for the product?

Higher quality of goods?


Client Reviews?

or... great rates?


When consumers find a website that provides them with goods at competitive costs, they are enthralled.


Setting a price that will keep your company ahead of the competition, boost sales, and optimize earnings all depend on having a strong Amazon pricing strategy.


A company might choose a price to expand its market share, maximize earnings, stay in business, or put fierce rivalry on other companies.


One of the most important components of creating a marketing plan is pricing. When making a purchasing decision, consumers look at a product's pricing first.


Businesses need to take into account more than just earnings.


Businesses must ensure that their pricing generate a healthy profit and pay for their operational, marketing, and production costs.


Setting the optimal price for your products is essential if you want to make money and stay in the market.


If you are unfamiliar with the world of online shopping, determining the price may seem like a difficult and drawn-out procedure. Increasing or decreasing the price could get your company into legal trouble. Lowering your pricing will result in little to no profit, while raising it will drive clients to your rivals.


We'll go over several crucial pricing techniques in today's post so you can determine the best price for your products without sacrificing your profit margin.


Seven Crucial E-Commerce Pricing Techniques to Outperform Your Competition

1. Pricing Based on Costs

Compared to the other strategies on the list, this one is more common. This approach is used by those who are new to the world of eCommerce to determine the pricing of their products.


Cost-based pricing is a rather straightforward approach. It emphasizes the business aspect above the client aspect more. The company determines the pricing based on how much profit it hopes to gain. It does not factor in the price that the purchasers are willing to pay.


The cost of the goods, the business expenses, and the desired profit per item must all be included in order to determine the selling price of your products using this technique. Your selling price will be the total of all of the above.


Assume for the purposes of this example that a product costs $10. The company was required to pay $5 for packaging costs and $4 for freight. The company's current goal is to make $6 for each unit of this product it sells.


The total is $10 + $4 + $5 + $6 = $20.


As a result, the company will decide to offer their goods for $20.


2. Pricing Based on Competitors

This is yet another of the simplest and most used eCommerce pricing techniques. Before implementing a competitor-based pricing strategy, a business needs to conduct some preliminary research.


A business must monitor the prices its competitors set for the identical product it sells. For example, if an eCommerce business sells books, it has to see what its rivals are charging for the same books.


Make a list by writing down the various prices that the rivals have established. After finishing, indicate the best and lowest pricing. Calculate the mean of the greatest and lowest amount. You will receive the selling price of your goods from it.


Setting prices for their items below the average is a common mistake made by novices. Avoid making this error! It will prevent you from making a respectable profit and make it more difficult for your company to pay for its marketing and operating costs.


Examine the following example:

·       A moisturizing product costs $14.

·       The company spends $7 on expenditures.

·       The package now costs $21 in total.

·       The average selling price, as determined by the firm, is $30.

·       The company's potential profit can be calculated by deducting its costs from the average selling price.

·       $30 - $21 = $9. Each moisturizer will bring in $9 for the company.


3. Pricing Based on Consumers

Value-based pricing, or consumer-based pricing, combines the two concepts mentioned above: competitor-based pricing and cost-based pricing. There is a small wrinkle to this pricing method, though.


In addition to the product cost, operating expenses, and average selling price, businesses also need to take into account the value they offer to their clients.


The best thing about this tactic is that it lets you charge your clients a fair amount without taking away from your company's profits.


The value that a company offers its clients is the primary aspect to take into account when using this method. Value is your unique selling proposition (USP) to clients. Consider what distinguishes your products or services from those offered by competitors. Is it your products' quality, quantity, packaging, or the customer care you offer to your esteemed customers? Determine what benefits you may provide your clients in order to make your items seem more valuable to them and earn their loyalty.


Let's go to the price strategy calculation:


·       Make a cost and expense calculation for the product you are selling. Assume the amount is $12.

·       Next, use the competitor-based technique to get the average selling price. Assume it is $18.

·       You will make a profit of $18 - $12 = $6.


·       Assuming you provide superior packaging and your competitors do not increase the selling price, let's say you add some value to your products. $20 = $18 + $2.

·       Your profit on each product sold has now gone from $6 to $8.


4. Adjustable Prices

This pricing technique is adaptable, as its name would imply. The market's supply and demand will determine how much is offered, so the prices determined by this method are flexible.


A business can adjust the pricing of its products based on the level of market rivalry and the availability of the commodities. The products' price can be lowered to make them more affordable and draw in more clients if there is more competition in the market or if new companies are joining it.


Similar to this, a company can raise prices if there is a large market demand for the items and only a small number of suppliers can meet that need. In addition, the business may offer to sell excess inventory at a discount in order to get rid of it if it has purchased more and is concerned that it may become outdated, expire, or sustain damage.


In order to use this pricing strategy, a company needs to keep an eye on the prices its rivals set.


The eCommerce companies who have the time and resources to monitor competitors' prices, market demand, and suppliers operating in the same niche would benefit most from this pricing strategy.


5. Bundle Pricing

Bundle pricing makes sense for you if you operate in a highly competitive niche.  In addition to increasing e-commerce sales, this pricing strategy draws customers to your store.


It is not too difficult to figure out the price under this technique. All you need to do is put together a set of related products and offer them as a package deal.


Offering bundled products to customers helps the company's average order value rise. When several items are sold, the business will only keep track of one transaction.


To assemble a package, determine which of your products are best-selling.  To make a bundle, combine those items with things that are low-selling or low-cost. For example, you have a $15 pair of pants that are a best-seller in your store. Shades cost $10, while t-shirts cost $5. The consumer will be required to pay $30 if he purchases these things individually. Customers would be pleased to save $6 on buying three items together, though, if the company bundles these and sells it for $24.


Bundling products is a useful strategy if you wish to sell off your less-popular items or clear out your inventory.


6. Loss Leader Pricing

Have you ever been duped by a YouTube video's description or thumbnail? To draw users in and entice them to play the video, uploaders employ clickbait in the form of misleading titles or thumbnails.


This is also how loss-leader pricing operates.


Customers are drawn in by the marketers' cheap product pricing, which pique their curiosity about how a business makes money from offering goods at such low prices. The key is that by selling the product for a price that barely pays the overhead of the company, they don't turn a profit.


You must be asking yourself why a company that doesn't turn a profit would adopt this pricing strategy. Well, recall how we discussed deceiving the public?


Utilizing a loss-leader price approach, you can entice customers to visit your website and browse through further products. Alternatively, to market the goods that would entice clients to return to your website to place refill orders. For example, a business may charge $100 for a printer. Because of the printer's low cost, the buyer will buy it; nevertheless, when the ink runs out, he will visit the website again and get the $55 ink refill.


Likewise, there are websites that provide oil diffusers for $25. However, each bottle of essential oils required to operate the diffusers costs $12.


The printer and diffuser in the first two cases above are sold at a loss; however, the sales of refills and oils make up the difference.

The company that sells products with refills, add-ons, or other incentives that encourage customers to make recurring purchases would benefit most from this pricing approach.


7. Skimming prices

We're confident you've come across a lot of "Limited Edition" or "Exclusive offers" on different websites. Offering them something unique or rare increases their desire for it. It incites a crisis and serves as a powerful motivator for a buyer to choose to buy the goods.


The majority of firms use the term "limited edition" or "special edition" to market their pricey products. Customers think that the launched assortment is limited and will quickly run out. Customers are willing to pay a premium price for limited edition products because they are afraid of missing out.


Reducing the price for a little time is another strategy the businesses employ to generate urgency. Companies might, for example, provide customers a 30% discount for the following day. Customers will be compelled to shop within the next day in order to take advantage of the savings.


When you want customers to hurry up and add items to their shopping carts, this strategy works well.


8. Break-Even Prices

Businesses utilize this price technique to get rid of their goods before it goes bad, expires, or becomes unsalable.


The cost of the goods and additional expenses are included in the selling price. There are no profits in it. An entrepreneur uses this tactic to recoup his expenditures even in the event that he loses money.


9. Regional Costs

You cannot maintain a single selling price for all of the countries to which your eCommerce company ships its products. You must include in taxes, freight costs, and customs fees when calculating the cost of your purchases.


In addition, you must establish your selling price in accordance with the laws and regulations of the nation as well as the level of market competition.


This price approach is not the only one employed. It is used in conjunction with other strategies to determine a selling price for items traded internationally.


10. Incongruous Prices

Using this pricing technique is a great method to get your eCommerce products priced competitively. When inspecting the price, the consumer always pays attention to the left-hand side digit. A product priced at $4.99 will seem more affordable than one priced at $5.00. The buyer chooses the first product even if there is only a one-cent price difference since number four is less expensive than number five.


Set strange prices for your goods to entice clients to buy more. Reduce the price of your product from $10.00 to $9.95. It will deceive your clients into thinking that the products are not overly priced but rather fairly priced.


Final Thoughts

The ideal price plan for your company will mostly depend on the objectives and characteristics of the enterprise.


Risks and business go hand in together. The price of the inventory you buy or the raw materials you use could rise dramatically. To thrive in the market, turn a profit, and keep ahead of your competitors, be ready to adjust your rates in light of fluctuating labor costs, freight costs, taxes, and other expenses.


Make sure you charge your clients a reasonable amount. Because consumers are now knowledgeable, you must have a compelling price approach to beat them.

Read More:

10 Strategies to Lower Your Amazon Pick and Pack Fees

Expertise's Function in E-Commerce Social Proof

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