Top 3 Pricing Strategies for Your Online Store
05/01/2017 | Share:
Setting the right price for the products you sell in your online store is crucial to commercial success. We take a look at the top three pricing strategies which can help you gain and maintain an advantage over your competitors.
1: What’s your USP?
Your Unique Selling Proposition (USP) will determine your target customers and whether you are discount- or value-centric. Selling hand-made silk scarves, for example, will position you as value-centric (for which people will pay more), while offering competitively-priced 3-D printers will establish your online store as discount-centric (where customers will expect low prices).
Also consider additional strategies such as free shipping on orders over a certain value, or charitable donations, to add perceived value to your products and enhance your USP.
1: Cost-based pricing
In order to maintain a healthy profit margin, you must know your costs down to the last penny. As well as the price of the items you pay your suppliers for you must also take into consideration such things as salaries for any employees you may have (and, of course, your own salary), marketing, the cost of your e-commerce platform, your internet provider’s costs and any other overheads which you incur.
Omitting a single one of these items will skew the ‘real’ cost of the items you’re selling and negatively impact on your profits in both the short and long term.
3: Dynamic pricing
Sophisticated price-tracking software enables you to analyse your competitors’ prices and make adjustments to adapt your price position whilst still making a profit. They will also alert you if your prices are below your competitors’, in which case an increase will enhance your profit margin without damaging your reputation for value-for-money.
The best use of dynamic pricing is in conjunction with cost-based pricing, where costs are paramount and target profit margins are adhered to in order to maintain profitability and meet your customers’ price expectations.
With online retail now making up almost 25% of UK retail sales – the highest in any G20 economy – there is clearly a wide consumer base, eager for products of every variety. However, there is also fierce competition so it’s important that the pricing strategy you adopt for your online store reflects reality as well as your aspirations.
