by Kevin Cook

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Last Updated on: 8th November 2024, 01:13 pm

The best way is to understand their market.

See how they are pricing. Being new to eCommerce, pricing at the same level won’t work for you. Make people know why should they come to you, not another online store. And the answer should be price. If you offer products at a lesser price than the market, people will definitely come to you and give it a try. Moreover, if you are into the custom printing e-commerce business, then you should be aware of the right pricing, especially for screen printing.

Moreover, pricing is not the only solution. Marketing also plays a major role to recognize who you are. Are you a legit website that people can trust?

Build relationships with people in social media, forums, emails, newsletters, etc.

Top 8 Strategies to Price eCommerce Products:

Pricing your products is a big decision that will ultimately have a large effect on your business. A strong pricing strategy is a lot more than just calculating the costs and adding a markup. So today I’m going to show you eight effective pricing strategies that will help you make your business more competitive, and make more sales.

1. Cost-plus pricing:

First, let’s talk about Cost Plus Pricing. Cost Plus Pricing is by far the easiest way to think about pricing your products. I’m mentioning it here first, simply because it’s popular. Not because it’s the best pricing strategy. Cost Plus Pricing is exactly what it sounds like, calculating the costs of your products and adding on a markup.

For retailers, this markup is often double the wholesale price, but the market percentage is variable depending on your business. While this strategy does preserve a nice profit margin, there are some issues because it doesn’t take into account market factors like competition or demand for your product. So it can actually lead to a situation where you’re charging too much or too little.

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2. Competitive Pricing:

Next, we have Competitive Pricing. Competitive Pricing is when you check out what your competitors are charging to figure out the going rate. Then rather than focusing on profit margin as a starting point, this pricing strategy is about making the price of your products comparative, and you can do this one of two ways. The first is pricing your products slightly lower than the competition, thereby attracting value shoppers who were price sensitive.

Think Walmart versus whole foods. If you have lower costs and can actively promote your special pricing, then this can communicate that your brand is economic and accessible. The second is pricing your products slightly higher, signaling that your product might be better and quality. Think Starbucks versus Dunkin Donuts. Competitive pricing is often used in highly saturated markets with highly similar products, where pricing can be a differentiator.

3. Price Skimming:

Next, we have Price Skimming. Price Skimming is when a company charges the highest possible price for a product, right from the outset, and then decreases it over time. This is a pricing strategy that Apple has used for years.

Price Skimming works best when there is a scarcity of a product and when new versions of that product will be rolled out in the future, justifying the reduced cost of the previous generation, because it’s become less relevant.

Businesses use this pricing strategy. They have stand-out products with features that other companies just can’t compete with. So if your business has a prestigious image and creates innovative products,

Price Skimming could be the pricing strategy for you. However, it’s not going to work if you’re in a saturated market and your product doesn’t truly stand out.

4. Penetration Pricing:

Now let’s talk about Penetration Pricing, which is when you use a low price to enter a market. It’s used to draw attention to your business and take away business from competitors who effectively can’t match that price. Once you have more wallet share, then you begin raising the price.

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This pricing strategy is famously used by internet service providers, like Comcast, who attract customers with cheap introductory prices. But once the introduction is over, the price of the service goes up. In retail, this means intentionally pricing items low. For example, the grocery store Costco prices organic food items at lower prices than can be found elsewhere.

But while these prices are low now, we can expect, they will increase over time as they capture more of the organic food market. Discount pricing like coupons, seasonal pricing, and of course sales, can all be forms of penetration pricing as well, helping stores get rid of old inventory and attract some short-term traffic to the store.

The logic behind Penetration Pricing is that once the sale is over, some customers will remain loyal to the brand in the long term. One important thing to be aware of is that too many sales can make people wary of paying the regular price and too low prices can create a perception of bad quality products.

5. Value-Based Pricing:

Next, we have Value-Based Pricing. Value-Based Pricing is when you set the price based on how much the customer perceives your product to be worth. This is done by locating data on what customers pay for comparable products, then listing what makes your product different and better. Then you need to place a financial value on those differentiating features.

Lastly, you need to communicate the extra value your product provides to customers. Now, Value-Based Pricing is one of the most ideal strategies for entrepreneurs. However, it only works if you have a differentiated product and you are genuinely providing more value than your customers pay a price. Value-Based Pricing, when done right, is a great way to build customer loyalty, but it demands you stay in lockstep with your customer’s desires.

6. Loss Leader Pricing:

Now let’s talk about Loss Leader Pricing. Loss Leader Pricing is a strategy where you price a product for a loss intentionally to attract customers, to get them in the door or to your site where they may buy other items.

Now, while this might sound a lot like Penetration Pricing on the surface, it’s only tangentially related because the motive is entirely different. The goal with loss leader pricing is to make your profit on other items, not by increasing the price of the item you’re taking a hit on.

Loss Leader Pricing heavily involved in the video game industry where game consoles are sometimes sold for less than the cost to build because the profit is made on video games and subscription services. A Loss Leader strategy is best employed by larger companies who have other products they can sell to make up for the loss.

7. Bundle Pricing:

Now let’s talk about Bundle Pricing. As the name probably applies, Bundle Pricing is when you sell two or more complementary products together for a single price.

Now, this doesn’t require much explanation. But companies use it to add value for customers at a lower cost, hopefully, increase the number of sales and increase loyalty to the brands. For example, getting a new phone with your data and phone plan is an example of Bundle Pricing.

8. Anchor Pricing:

Now let’s talk about Anchor Pricing. Anchor Pricing is the use of comparison, and everyone knows humans love to compare things. With Anchor Pricing a retailer lists both the discounted price and the original price right beside each other, to establish the savings you’ll gain from buying right now.

We know that Anchor Pricing triggers the anchoring cognitive bias. As a result, we use the initial piece of information as the anchor. Therefore, we make judgements on that basis. If you’ve ever seen a price slashed out and a discount next to it and thought, I better take advantage of this while it lasts, well you have just participated in anchor pricing.

Final Words:

Finally, sweet talks work for the first time. It is the quality of your product that defines how you are going to continue with your business. Customer retention is important. Good quality products and services bring in new and existing customers based on trustability.

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