Taking the time to explore ecommerce strategies for pricing up front will help your store find the right time to charge your customers enough and stay competitive, but not so that they abandon their carts and leave your store. .
Value and price: What is the difference?
There is a huge difference between value and price. The price is simply the number on the digital price tag, telling customers how much something costs. The value, however, is a bit more complex.
While many people think that value is synonymous with low price, it really is the compromise between the benefits a customer receives from a product and the price he or she pays for it. Let's say a customer is considering taking out a subscription on your online store. Whether he knows it or not, he assesses the customer value of the product, that is, their perception of its benefits compared to their perception of its price.
How you position value versus price is highly dependent on your brand's unique selling proposition. Some brands choose to emphasize their accessibility. Others, especially high-end and luxury brands, focus heavily on value, making price an after-cost reflection of what their products and services can offer their customers. This is precisely why some sellers choose to pursue a value-based approach rather than a price-based approach.
But the merchants must be warned; you need accurate insight into customer value to avoid setting prices too high or too low. Run A / B tests and adjust your prices in a fair way. By employing one of the best eCommerce website builders will give you the flexibility to adjust prices and inventory over time to keep up with the ebb and flow of consumer demand.
A simple question of cost and markup
Some sellers prefer a simpler mathematical approach to pricing, namely: The price increased.
It is a model where sellers simply take over the cost of the product and add their desired profit margin to calculate the selling price. You can add the margin in dollars or as a percentage, but either way, the end result is a simple question of how much your store needs to make in order to make it worth continuing to stock a given product.
The main advantage is that this model protects against financial loss because you have set your own margins. The downside is that you could actually be under-selling your products. Sure, you get your desired margin, but what if consumers aren't willing to pay what you ask?
Consider your competitors
Ecommerce stores don't exist in a vacuum. Keeping an eye on your competition's prices is the only way to gauge your store's prices in a given market. This is called market-based pricing because it requires a comparison between your activities and those of the market in general.
You can decide to increase or decrease your margins to stay competitive, depending on the market as a whole. After all, if you charge a lot more than the competition, your store is definitely not going to be attractive. But if you ask for a little less, your margins can be unsustainable.
Your ecommerce strategies for pricing, really depend on your unique selling proposition of your brand and the niche in which you operate. Whether you go for a simple cost-based model or a more dynamic value-based model, running tests and adjusting your price to your needs is the best way to achieve a better balance.
