Pricing is a stumbling block for many aspiring ecommerce giants, and often the issue is that it’s not properly understood nor adequately considered during the early stages of a site’s development.
To avoid any missteps in this area, take the following factors onboard and build pricing strategies based on them to ensure sales can flourish rather than faltering.
Knowing Your Target Market and Crafting the Perfect Price Point
Before setting prices for your online store, it’s important to understand who you are selling to. Spend time researching your target market by utilizing a variety of tools such as surveys, focus groups and data analysis. Doing so will give you valuable insights into their buying behaviors which can be used when crafting pricing strategies that maximize profits, while still remaining competitive in the market.
Also, consider using dynamic pricing models where possible. These allow you to adjust prices based on customer demand and other factors like seasonality, thus creating opportunities for further profit optimization without sacrificing customer loyalty or satisfaction.
Understanding MAP vs MSRP Pricing
When pricing your products, it is important to understand the difference between MAP (Minimum Advertised Price) and MSRP (Manufacturer Suggested Retail Price).
The manufacturer typically sets a higher suggested retail price for their product, which retailers can choose to advertise. This allows them some leeway in terms of discounts or sales they offer customers, without violating the agreement with manufacturers.
On the other hand, Minimum Advertised Prices are set by manufacturers as well, but these prices must remain consistent across all participating retailers. As such it’s important to be aware of both when setting prices for your online store, so that you are not overstepping the line. It’s worth comparing MAP and MSRP pricing so that you don’t get caught out here.
Taking Advantage of Discounts to Drive Sales
Discounts are a great way to drive sales and attract customers, but it’s important to ensure you can still turn a profit.
Start by considering what type of discounts work best for your products, whether they be percentage-based or fixed amount price reductions, coupon codes or free shipping.
Also look into loyalty programs that reward repeat business, as well as seasonal promotions like holiday specials and back-to-school deals, which help increase customer engagement.
Finally, consider bundling multiple items together with attractive pricing options. This is especially effective when trying to move inventory quickly without sacrificing margins too much in the process.
Analyzing Competitor Prices for Insightful Benchmarking
Successfully setting prices for your online store involves more than just understanding target markets and discounts. You should also be aware of what rivals are doing in terms of pricing, so you can stay competitive.
To do this, leverage tracking software to monitor competitor’s prices. This way you will always have a good idea on how they are positioning their products in the market, and if any changes need to be made to your own prices based on that information.
Put eCommerce analytics tools to work for you as well. These will provide valuable insights into customer purchasing trends, which can help inform decisions regarding product pricing strategies over time.
The Bottom Line
Setting prices for your online store isn’t something you can do once and then forget about forever. Instead you have to be always on the lookout for changes to make, trends to follow and opportunities to grab in this arena.
Making the most of tools to automate things like price tracking and on-site adjustments makes sense, as it can be an almost entirely hands-off aspect of your operations if handled correctly.
