One of the toughest challenges for online sellers is establishing the price for a product or service. The Harvard Business Review discovered that 85% of companies think they could improve their pricing decisions. Making the wrong price decision will lead your company to profit loss and even bankruptcy because you are underselling your products and, therefore, not making money. So, we will tell you how your company can accurately price its products.   

1- Understand your customers’ behavior 

Analytics helps you understand your customers and market trends. For example, if you sell clothing and notice that some of your social media posts featuring blue shirts have many likes and comments, that means it is popular among consumers. In that case, you must raise your prices because when there is a high demand for a product, you can increase the price for that item. The exact process goes for a product that does not receive much love on social media. Reducing the price might be the best alternative for them, and that will help you increase your sales.   

The traffic of your webshop or website is another analytics that helps you put the price on your products. For instance, if Saturday is the most active day in your online shop, it makes sense to raise the prices that day. Also, take advantage of that and create a campaign to advertise your products on social media.    

Shopping cart abandonment also helps you understand your clients. Many factors play a role in shopping cart abandonment, and there are things you can do to prevent it. Baymard Institute found out in a survey that the top reason for abandonment was extra costs (48%), like shipping charges or hidden fees not mentioned before.    

2- Pick the ideal pricing strategy 

Choosing the correct pricing strategy is the next step. There are many pricing strategies, and depending on your objective, you can select the one that best fits your needs. With PriceTweakers’ DRS module, you can pick from 30 pricing strategies. These are some of the most common pricing tactics online sellers use for their shop.   

• Cost-based price 

This is the most-used pricing strategy by sellers due to its simplicity and effectiveness. The cost-based pricing strategy involves setting the price of a product or service based on the cost and then adding a margin to obtain the selling price. 

• Competitor-based  

This pricing strategy focuses on the prices of your competitors. With that information, you can create a pricing strategy. You may increase or decrease your products' prices. Increase the price when you offer something your competitors do not have or when you have more stock than them. Decrease them when you want to enter a new market or if you plan to make more sales than your rivals. Remember that this can lead to price wars, and this drop is a temporary strategy.    

• Charm pricing 

Charm pricing is also known as psychological pricing, and it relies on simple changes that trick the brain. Instead of a round number, add to the price .99. For example, the brain will read $12.99 as $12, not $13. The clients' brains are tricked into the idea that they are getting the best deal (value or quality). If you want to learn more about charm pricing, click here.  

Also, you can have the same price as your competition. You can combine those pricing strategies with others with the PriceTweakers. There are many combinations in our program that you can mix up to create the most unique and effective pricing strategy for your business. 

3- Try until you find the perfect strategy 

Your business can never stick to one pricing strategy and keep that one forever. As price changes over time and so does market trends, you must do the same with your strategy and modify it from time to time. 

Furthermore, you do not find the perfect strategy for your business immediately. Many times, you have to try and test many pricing strategies until you find the perfect one. Do not get frustrated if the first, second, or third pricing strategy you tested did not work.

Conclusion 

Pricing a product is a complicated task for retailers. If you do it wrong, it costs your company a lot of money. But if you follow these steps, your products will have the correct price on your online store or marketplace. PriceTweakers is a pricing tool that helps you create the best pricing strategies that will increase your sales and profits. We will help you save time and money. So, what are you waiting for to take your company to the next level? Contact us! 

Share this page