Retail industry is a constantly growing market, in fact, the amount spent in the retail sector reached 29.8 billion British pounds in January 2019, according to Statista.
Due to this sector being highly competitive, it is crucial for business to carefully craft their marketing strategies and try to differentiate from competitors. One of the factors that you should have in mind, is pricing of your products to help you achieve profitable growth.
There are different pricing strategy types and eCommerce retail trends 2019, that you need to think about, before going forward with implementing a pricing strategy business plan and establishing a perfect price for your products.
Let’s go through the best ways that will help you create a pricing strategy for your retail or eCommerce business.
Why is Pricing So Important?
Establishing a perfect price is an important step towards the dream profit that your business is looking for. More than a half of online shoppers worldwide, considers eCommerce pricing as the very first criteria affecting their buying decision.
Rand Fishkin, founder of Moz says:
“We need to pick a price where folks feel like they’re getting value for monay so price isn’t a reason they cancel”
If the price is too low, the risk of the company not making any money at all is higher than ever. On the other hand, if store prices are too high, less sales will be generated overall and it will limit the customers with lower budget.
Online pricing acts like a marketing tool and if well balanced, it can result in higher conversion rates from a product page. As an online retailer you should care about the pricing of your items, as much as your customers do.
Best Tips to Creating A Pricing Strategy for Your Business
As you are familiar with the importance of online pricing in the world of retail, in order to make the most of it, you need carefully prepare a strategy for your business. Luckily, we will take you through the step-by-step guide to creating a pricing strategy for an online store.
Find Your Unique Selling Point
What makes you different from your competitors? Establishing a unique selling point will not only give you a chance to stand out in a crowd, but also give shoppers a reason to choose your store. A good example of an impressive USP strategy is the UK’s online supermarket, Ocado.
Ocado is known for being one of the most expensive shopping destinations, if it goes to groceries. However, the store is not competing with other supermarkets on pricing, because their strategy focuses on a unique selling point which brings the customers in.
They encourage first-time buyers to try their service, offering 30% off the initial purchase and a free delivery for three months. This way, shoppers focus on the value of the service and what they can gain from it, instead of the price of the product itself.
You Don’t Have to Offer the Lowest Price
Many eCommerce businesses regularly track the prices that their competitors offer. However, it shouldn’t be the main factor when creating a marketing strategy, because constant cost cutting may lead to devaluation of your products and no profit.
As a retailer, you need to think of the ways you can compete with other brands on the market, without losing profit. Target customers that are looking for special offers and instead of lowering your price significantly, find a balance and add something extra to the purchase.
For instance, if your competition charges £35 for the same product on average, you don’t have to go under £20 to bring the customers in. You can lower the price to just below £30 which puts you in a better position than your competitor and can still result in high conversion rates.
Monitor the History of the Pricing
Regular screening and understanding changes in price are essential, in order to understand when and how to approach your strategy throughout the whole retail year. You should not only look at the history of your pricing, but also use price comparison tool such as Prisync, Price Trakker or Competitor Monitor, to discover it from the competitor’s perspective.
In general, no product keeps the same price throughout their entire existence on the site. There are several factors that influence their cost, especially different events that retailers are planning for. People love holiday shopping and you should definitely change the prices of your items, according to the most important holidays in your industry as well as pricing history of your competitors.
Gaining access to that information will help you proactively prepare your strategy for the whole retail year and adjust the prices of your products, exactly when needed.
Meet the Loss-Leader Pricing
A great solution if you have a lot of different products on your site. The strategy starts by offering one product at the price below market value, which starts bringing people to your site.
Let’s say your company sells cameras and filming equipment. If you add one camera to your catalogue, at the really low and discounted price, people will want to see more of your products. And here is, when cross-selling and upselling come to life.
When buying a camera, you will need a spare battery, a charger, a case, and so it goes on. Some items may be even more expensive than the discounted item people wanted to buy in the first place. By attracting people to your site, you have a chance to offer more to each individual and profit from it.
Offer Bundle Pricing
This strategy is pretty straight forward. Bundle pricing means selling a range of products for a lower rate than consumers would face, if they purchased each item individually.
It is very likely that your customers will be attracted by the amount of money they can save from a purchase and will be tempted to pay more at once. By improving the value of what you’re selling, you will definitely see the growth in sales and customer satisfaction.
Bundle products of a similar nature, such as a phone, case and a charger or a whole outfit such as a dress, blazer and heels. This is a great way of increasing your average order value, as well as encouraging customers to make a purchase and search for more products on your site.
Let’s wrap it up
We have introduced you to some of many ways of creating a pricing strategy for your retail business. Ecommerce market is very competitive and in order to achieve your goals and make profit, you need to think of the ways to differentiate from competitors and find a perfect price for your products. In order to be successful, remember to follow these steps:
- Find your unique selling point
- Don’t offer the lowest price
- Monitor the history of pricing
- Meet the loss-leader pricing
- Offer bundle pricing