Top 4 Tips On Setting Competitive Pricing
18/07/2017 | Share:
It might surprise you but when it comes to setting competitive online pricing, the ecommerce business with the lowest pricing model rarely often wins in the long term. The reason being, an aggressive pricing model is not a sustainable business practice, especially if you price your products too low.
Therefore even if your ecommerce business has plenty of customers, if your sales don’t even cover your costs, never mind make a profit, you will need to change your business model or look at sourcing a more competitively priced supplier. Therefore in this blog we look at things to consider when setting competitive pricing.
1. Capitalise on your USP (Unique Selling Point)
Firstly you need to acknowledge what makes your ecommerce business different. For example, maybe you’ve got expert product knowledge or you appeal to a niche target audience.Then once you’ve ascertained your USP, you can then begin to look at developing strategic marketing activities which genuinely complement your goods, services and USP.
2. Know Your Margins Inside and Out
In respect of overseas stock, make sure you not only track currency exchange rates and shipping costs, but you also keep some funds aside just in case you want to take advantage of any major price drop. Also by understanding the true cost of each product including adding your time and monthly outgoings. You can systematically work out how much margin you truly have to work with.
3. Offer Incentives
Once you know exactly what you’ve got to play with in respect of margins, you can then look at short term promotions which offer very competitive pricing for a limited time only.
Possible incentives include
– Buy one item and get one free or half price
– 25% off certain purchases until the end of the month
– Free UK shipping for customers who spend over a certain amount
– Recommend a friend & receive a discount voucher
Short term strategic pricing campaigns will enable you to appeal to new customers without cannibalising your existing client data base.
4. Test Your Ecommerce Pricing Strategy
To ensure you are getting the best deal for your ecommerce business in respect of new sales, supplier price and profit, ensure you test and measure your business’ pricing strategy.
For example maybe a Black Friday sales event is the best time to move old stock or alternatively you find a dedicated promotion when you are not competing with everyone else works better for you. Whatever you do, always track your business’ pricing strategy and make sure you are setting the best price for you and your customers.
As a result by understanding the best time to run pricing incentives and the true cost of each of your products, you can then set a competitive online pricing strategy which appeals to both old and new customers alike.
