When you have an eCommerce, one of the actions you have to do is decide the price that your products will have. The problem is that this decision should not be taken lightly, but rather you have to follow a pricing strategy that satisfies the company's profitability, while being attractive enough for people to buy from you.
And how do you do that? From now on we tell you that it is not something easy to apply. But If you have some basic knowledge, you may be much more successful with those prices. How about we give you some basics to achieve it?
What is pricing strategy
Let's start by defining what the pricing strategy would be. It is a process by which it is decided at what price the products or services are going to be sold. AND It is something that is not taken lightly, but is fixed based on several factors.
Some of them are related to the costs involved in making the products (or providing the service). But also the demand (that is, what the customer values that product or service), as well as the competition, since you must know what others do to give an equal, greater or lesser value than theirs.
In addition to those factors, which we consider important, Many others can be taken into account such as:
The life cycle of the product or service.
The age of your company.
The very strategy to sell “quality” at a high price. That is, determine high prices to influence the way consumers think and that they consider that products or services are of higher quality than other cheaper ones (even when they are the same).
The importance of the pricing strategy is because it can bring us closer to or further away from customers. And it is that the price is one of the determining factors to buy or not.
Pricing Strategies You Should Know
When setting prices there are several strategies that you can follow. These will depend on your product, your company, competition... but it does not hurt to know them to see which one can best adapt to what you need.
In this sense, the most important are left below.
Low prices
This is one of the strategies that works well for startups or for new products. It is a way of incentivizing the purchase by offering a lower price in order for them to try the service (or the product) and thus they can come back again.
The problem you have is that you have to take into account the maximum price, which would be the one that costs us to manufacture (or buy) the product so as not to lose out on the sales you make. In this case the benefits are minimal, but it compensates if there is a large volume of sales.
premium prices
If before we told you to lower prices, this time we tell you the opposite. That is, it consists of setting prices that are higher than those of competitors. AND Before you ask, the goal is for the consumer to associate your products with quality, luxury, and value. The problem is that this, with a new online store, does not work, because, as the saying goes, they prefer "the known bad than the good to know".
However, if you already have a good reputation and your customers are loyal, you can try new products at higher prices and bet on their quality.
psychological prices
Have you ever stopped to think about the reason why, instead of saying that something is worth 20 euros, they actually put 19,99 euros on it? Well, it has a reason for being. And it's easy to understand. If they give you 20 euros, you know that 20 euros is going to cost you. But if you see 19,99, we tend to make the cents invisible, because we don't give them value. Therefore, the buyer's mind is left with the fact that 19 is less than 20, and that therefore he is saving, although the truth is that it is only one cent.
And that is another of the pricing strategies that you can bet on when setting yours.
price discrimination
This pricing strategy is that customers will pay different prices for the same product or service.
An example of this are the tickets to enter museums. As you know, children and retirees pay much less than normal tickets. Well, something like this is what you can do for your online store. Although it is somewhat more complicated to verify.
Rising Price Strategy
This other can be one of the most applied, especially for training. It consists of offering a product at a fairly cheap price (perhaps reaching profit 0) and when x sales have been reached, raise it a bit... And re-establish sales. Once it arrives, the price goes up again.
In this way, the "urgency" factor is introduced to customers, in the sense that, If they buy as soon as possible, they will have it at a cheaper price than if they wait longer.
How to know if the pricing strategy works
One of the doubts that many eCommerce owners have when setting the prices of their products and services is whether it is not too "cheap" or too expensive.
The only way to know is by looking at the results that are produced. If a large quantity of that product is sold at that price, it is possible that, checking your competitors a bit, you realize that it is cheaper. And here you could either raise the price, or maintain it and retain customers.
In the event that it is more expensive, you will realize that customers do not buy from you, or abandon the cart. Again you will have to review the competition and also the file to find out if there is anything you can improve (at the text level) to imply that your product is of better quality than that of the competition (and hence the price).
Has the pricing strategy become clearer to you now?