The pricing of goods by eCommerce retailers is becoming increasingly more competitive, thus forcing eCommerce retailers to make an extra effort to price their products right. Big online businesses, like Amazon, have the advantage over the smaller businesses, as they can lower their prices in order to try and drive the smaller retailers out of business. In order to survive, the smaller retailers have to develop a competitive pricing strategy for their products.
How does a small retailer go about competing with the biggest eCommerce retailers in the market today? Here are a few tips to improve pricing strategy:
1. Focus on your unique points
Focus on your company’s unique selling points. What makes you different from the rest of online retailers? Do you have effective customer support? Or do you have access to special bargains that none of the competitors have?
It is important to develop your creativity. When putting together a marketing strategy for your products; be different and think out of the box.
2. Be careful when lowering prices
You must know when to lower your price, since having the most affordable product does not always mean that you will make a profit. You may even lose money in the process.
If you continue to undercut the market by lowering your products’ prices, your customers will come to expect the lowered price. Ultimately, this will cost you your business, and your customers, as you cannot maintain your current pricing.
3.Promote your products using incentives
Once you have put together a strong pricing strategy for your products, the second step is to add buying incentives to your product range.
Some examples of buying incentives are:
- If you have a large number of a certain product, offer two-for-one sales. This will help you increase your customer base. People come back to the same website when they see that there are good incentives on offer.
- Another technique includes using large percentages to indicate savings to customers. Instead of saying “25% discount”, you may want to say “Buy one and get fifty percent off on the next one!”
- Employ Loss-Leader strategies
Employ a Loss-Leader strategy to attract new customers which will increase your sales and turnover. This strategy seems to be common practice when a new business first enters the market, or an established business enters the market.
To use this simple strategy, you lower the price of one product below the market value and increase the price of a related product. You then sell both products together. You will make a loss on the one product, but gain customers as well as making a profit on the second product.
- Consult a professional pricing specialists
Depending on your experience and the type of business you have, it might be a wise idea to consult a professional pricing specialist to help you put together a competitive pricing strategy.
There are also pricing strategy software solutions that you can use to help you put together a competitive pricing strategy. One company that offers such services is Upstream Commerce. They provide a solution which analyzes your data and helps formulates the necessary pricing strategies for your business. You may access this retail dynamic pricing tool through the UpstreamCommerce site.
In order to survive the cutthroat business world, it’s crucial to employ the “right” pricing strategy for your business model. Do not hesitate to contact a pricing specialist to help you find your competitive edge.