What is the most effective pricing strategy for your eCommerce business?

What is the most effective pricing strategy for your eCommerce business?

04/09/2021 - Pricing strategy

To each their own. In the eCommerce world, this means that what works for the rest isn’t necessarily the best for your online store. When it comes to pricing strategies, this is even more relevant. For these to work, it’s essential for them to adapt to your type of business, responding to its needs, to the types of products in your catalogue, to the behaviour of your users during the sale… Does dynamic pricing or the creation of ad hoc discounts work better for you? Here, we’ll give you multiple examples so that you can find the best pricing strategy for your eCommerce business.

3 keys to choosing the best pricing strategy

  • Define the relationship between your catalogue and your consumers. Pricing strategies don’t work the same for essential items as they do in the luxury sector. The perception that users have of your brand will define their price sensitivity as well as the margin that you can play with.
  • Know your competition thoroughly. One of the most frequent errors is incorrectly identifying your competition since you go in thinking only about business models that are exactly the same as yours. Carry out a market analysis to find out who else sells your product, whatever form it’s in, or if there are other types of online stores that could be competitors because of their similarity. 

Monitor your stock. Having detailed knowledge of the stock that’s in your warehouse and controlling its management, such as the expenses incurred, is essential. This involves the cost of acquisition, maintenance, storage, logistics, and so on, going beyond the simple number of units that, obviously, will have an impact on whether you can implement a pricing strategy that’s more or less exclusive.

The best pricing strategy

The pricing strategy your online shop needs to sell more

If you’ve already completed the three previous tasks, you already know the framework that your eCommerce business fits in. Now, we’ll tell you very simply which pricing strategy you ought to try in your online store to improve your sales and how to do it.

Pricing for newly launched eCommerce stores

If you’ve just landed in a market, use price skimming. This pricing strategy allows you to take advantage of entering the market where you have no direct competition, either because no one else is selling your products or because they aren’t doing so with the same characteristics. You’ll be able to include prices that are slightly above retail value to help you cover launch costs.

Pricing for retail eCommerce stores

You need dynamic pricing. This doesn’t exclude the other strategies but has become key in recent years. Get price optimisation software and fight for having the most competitive prices at all times.

Pricing for online supermarkets

With so many essential items in your catalogue, it can be hard to execute great price drops. Understood. A multifaceted pricing strategy is what you need. In many cases, you’ll have to stick to the manufacturer’s pricing guidelines while in others, you won’t have room for much manoeuvring. Take advantage of your proximity to recurring customers and offer discounts for packs, vouchers for re-filling their carts, loyalty offers for certain types of products, such as fresh items, and so on.

Pricing for eCommerce services

Compare yourself with the competition. Use their prices as a benchmark and highlight the improvements on price that your eCommerce business offers. And if you’re not the cheapest? Highlight what sets you apart and, of course, reinforce the benefits that your service offers with brand specifiers that you can also incorporate into your pricing strategy with discount codes, which are highly fashionable among influencers.

Pricing for eCommerce businesses with excess stock

Accumulated stock can be your worst enemy due to maintenance costs, more than the lack of sales. Open an outlet for your stagnant products using cross-selling strategies. Offer to add products to the cart or even offer them as gifts for going above a certain minimum purchase amount.

Pricing for luxury eCommerce stores

Here, psychological pricing is taken to the extreme. If you have a luxury eCommerce business and it’s well known, you’ve already taken a great step in the eyes of your potential customers. In this case, we recommend remaining faithful to the accuracy of your prices. Don’t offer aggressive discounts with each product to avoid generating mistrust. During sales periods, you can share these discounts generally, without detracting from the exclusivity of the product, which is an important part of the decision-making process.

Category: Pricing strategy

Tags: competition, ecommerce, pricing

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Angela
Angela de la Vieja
Content Manager

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