Today’s guest blog comes from Prisync — a developer of price tracking and monitoring software.
Setting too high or too low price rates can affect your business. So, how will you decide on the fair price for your ecommerce products?
When the price is very low, you will not get much profit. Customers will assume that you are selling low-quality products. On the contrary, high price rates will provoke your potential customers to go to your competitor’s store.
87% of shoppers say knowing they got a good deal is important when choosing a brand/store. Thus, perfect pricing is a must to retain customers and maintain the best position of your ecommerce store. Let us provide you with a guide on how to set the right price for your products.
While deciding on your product prices, you need to focus on two major things:
Still, there are some other factors related to your product pricing tactics.
Do you want to make your business more sustainable — or maybe you want to help the business grow rapidly? These goals can change in due course. However, you need to grow your business responsibly to ensure longevity.
Intelligent and fair pricing is the most important factor to reach your targets. Be focused on your targets and set the ideal product. That is what every successful marketer does.
Fixed costs refer to the costs incurred by your business.
Regardless of the number of orders for your ecommerce products, you need to incur this cost. For instance, it includes the cost of utilities, insurance, rent, and salaries. You can work on lowering most of your business costs, but not these. Proper maintenance of product prices is the only way to spread these costs.
Image: The Balance Small Business
Have you set the perfect price for ecommerce products? You may have decided on the product price. However, it must not be the final one. Test out different price levels and find one that works best to increase your sales.
To ensure that you have set the right price for your ecommerce products, it is essential to go through some steps.
Based on your chosen industry, you can find several competitors. Try to be more precise and accurate while comparing your business to competitors.
For instance, as a dairy product seller, you have to compare similar products in other ecommerce stores. It is better to find products made of similar ingredients.
After identifying your competitors, you can create a list of:
Researching your competitors is a great benchmark for setting fair prices.
A new ecommerce business may not have a considerable market share. With the growth of your business, you can start calculating the market share. Find the average sales volume of your business. Moreover, you need to identify the product prices that increase and decrease your profit margin.
How much have you spent on buying products from vendors? Moreover, product packaging costs must also be considered. The increasing number of sales can raise these costs. Add all these costs to overheads and note down the numerical figure.
You must also focus on some other factors:
There are many costs to consider when setting prices that are fair, but you can profit from.
You cannot run a business without making profits. Calculate the amount that you need to invest in the delivery team, materials, and other factors. Optimise your supply chain and ensure the standard costs.
When you have found ways to refine costs, you can adjust the product prices. Moreover, you can help your customers to save money. Although you can set a standard price, you may offer discounts on bulk purchases of different products.
Finally, we need to say that you cannot stick to a particular price rate throughout the year. If your competitors have adjusted the rate, you may also rethink that price. It is common for every ecommerce business to find a shift in the product price. You may have to communicate this with customers to ensure that your product prices are optimal.
These are the vital elements for setting fair, unbiased prices on your ecommerce website:
Price transparency increases the willingness of customers to purchase from your store. While selling premium products, you have to describe their quality and the reason for higher pricing.
Have you heard about Amazon’s scandal in 2000? Some shoppers claimed that the ecommerce company sold them a particular product at different price rates based on the chosen browser — this shows you must maintain equal prices without focusing on customer demographics.
Consistency in pricing is highly desirable. However, Amazon uses its dynamic pricing engine to adjust their prices every day. Although SMBs don’t have to make changes so frequently, they have to have some level of agility in their pricing decisions.
A reliable price tracking software helps you ensure that your product price is fair and decent. What can you do with this software? How does it help you?
Use the software to maintain the fair prices of your products. The proper pricing strengthens your relationship with customers. Observe how a change in price affects the demand for your products.
Moreover, you can conform to the industry norms. The software will let you decide on the right price for your products.
Setting fair prices plays an important role in the buyers’ decision-making process. It can be the difference between somebody shopping at your store or choosing a competitor instead. Use this guide to help ensure you’re setting the right prices to make your ecommerce store a success.