How to price your eCommerce products to increase sales?

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Can you recall the last time you visited your favorite store? Let’s relive those precious moments and how they relate genuinely to e-commerce pricing strategy.
Just imagine visiting your favorite store, checking the stalls briefly, touching and feeling the items and texture. The next thing that you know, you found your match. You grab it, try it, and loved it. However, here is the catch. You look at the price tag, and your head starts spinning. You nearly fell when your friend grabs you.
The price is too high for you. It’s not your deal, so you walk away without saying a word.
How many products or pages do you feel that a consumer sees before they buy a product from you? However, there is one thing that you can manage. Pricing is the right motivation for every customer. It can make or break a deal.
Regardless of the size of your e-commerce store, pricing is one strategy that will outwit every other strategy.
Don’t get scared with these stats. You can always change the direction of the wind by applying these smart e-commerce pricing strategies.

Cost-based pricing
This method demands the company to write down the unit cost for each product in its portfolio and add the profit margin separately for each product. So, the total cost is the sum of your unit cost plus the profit margin.
Here are some of the most common costs of an e-commerce business:
● The platform fee
● Shipping charges
● Bank and order processing fees
● Refunds & return
● Software
Even though the costing is easy, most of the e-commerce store owners fail to apply this strategy successfully.
The most crucial part in pricing the product and gain maximum profit depends upon the buyer.
For instance, if the product is a luxury product, customers won’t mind paying the price with the right profit margin. However, if the product is an everyday product or an electronic item, people will think twice before buying products from you. Here the profit margin is quite slim. You must be competitive when pricing such products.
Cost-Based pricing is the right approach when applied with other pricing strategies.

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Market-based pricing
If you’re selling in a market, you must be aware of your surroundings. There are more than 860,000 eCommerce products out there. Starting an e-commerce website service might be a great idea right now. There is a vast jungle out there, and every e-commerce website is competing with some service near their neighborhood. A professional web design agency can help you develop a decent website.
Competitive pricing doesn’t mean that you lower your prices until your margin is low. This is an endless race to the bottom whom no one wants to enter in.
The often neglected benefit of market-oriented pricing is that sometimes companies can increase their pricing at an exceptional rate. With just one competitive advantage, a company can set its price without worrying about its competitors.
Consider this example. Three competitors are selling the same product. First one is charging $170 while the second and third competitor is selling it for $210. Now, second and third competitors compete. Even if one competitor decreases the price to $200, they can increase their profit margin.

Dynamic pricing
An advanced level of market-based pricing is dynamic pricing. Here the prices change automatically based upon price changes of the competitors. Whenever there is a change in the cost of the competitor, a trigger is generated, and the price is adjusted automatically.
This is setting flexible prices by taking actual costs and adding profit margin along with the demand that the competitor is making. You’ll be able to set real-time prices as soon as your competitor makes any changes in their pricing.
Of course, this requires a ton of data. The crucial part is to convert that data into a usable form. So, it is preferred to use dynamic pricing software available in the market. The software will let you calculate the optimal pricing based upon your competitors’ pricing.
Once the rules are set, the repricing engine will work automatically with just a few fluctuations in the market. With just a little mix of repricing and competitive intelligence, your business will get a seamless advantage in the market. As you’ll be monitoring every move in the market, your pricing will be optimized and stay competitive.

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Consumer-based pricing
In every aspect of an eCommerce products, being customer-centric is the base of your success.
To offer a perfectly customized price, an e-commerce owner must answer these two questions first. What is my unique selling proposition? Do I take time to provide premium value to the customer which they cannot get from anywhere? These two questions will help the e-commerce business set a price that is the right fit for the customer.
The companies will remain and focus on value-addition and higher profits. This is a grand opportunity for the brand owner because the shoppers will buy with emotions rather than logic. With one or two differentiating factors, companies can get a better competitive advantage than their rivals.

Penetration Pricing
When a company is launching a new product, it might take help from penetration pricing. Penetration pricing is like introductory pricing, which is used to enter a new market.
The pricing model is quite simple. Just place the price slightly lower than your competitors. This pricing strategy can only be applied in the initial stages of the product launch. The purpose of penetration pricing is to allure customers into using the product for the first time.

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Loss leader pricing
A loss leader pricing is decreasing the price of one or two products to be sold at a lower price. The pricing model might give your temporary loss, but on the long-haul customers will buy more items than usual.
For instance, if you’re running an electronic store, you can add a seasonal discount on certain items. This will not only attract customers to buy discounted items; it will force them to try out some new products which are not on discount.

Conclusion
Pricing is not a static thing. You’ll be changing the price based upon the market conditions. At times, you’ll have to bear some loss to gain a competitive advantage, other times you can increase your price without any fear of losing a customer. In every case, you must devise a strategy that will guide you on your way to success.

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