Pricing is usually determined on the basis of competition that is hanging around. In the fiercely competitive E-commerce industry, if it’s not you, then it’s your competitor who is going to win the sales because he offers better deals on the pricing front.
Did you know that 90% of online shoppers say they compare deals on the Internet?
There could be numerous factors that consumers consider before making a purchase decision. But the most powerful and pivotal aspect that drives a purchase is the price of the product.
If you offer the best product with world-class quality and top-notch features, you may still not be chosen.
A Reality check – Customers are savvy and are capable of comparing prices and would move on if your competitor is giving away the same product with same features.
Only – at a price that gives him a competitive advantage.
The Price of the product is the most influential factor that to a large extent determines whether the product will be taken or not and could be detrimental to your business if you don’t get into pricing intelligence.
Why pricing intelligence?
Boost your sales
The core motive behind any business is to earn huge revenues and the factor that is most critical to this is how you price your product.
To be able to increase sales, you must price the product in such a manner that customers choose you over your competitors. To be able to achieve this, you must compare and analyze the prices, offers, deals and discounts of your competitors and make a pricing decision that is most appealing to your customers.
Pricing should be such that you are able to increase the sales and at the same time it should reflect the dynamics of cost, market demand, response to the competition, and profit objectives.
Get the pricing right
Having insanely low prices for your product to generate more demand or increasing prices to increase revenue, neither of this makes any sense. Price your products just right!
The best way to develop a good pricing is to combine the strategies of your competitors, that is, benchmarking.
Group your products by categories or brands and research your competitor’s pricing strategies. Both instances, that is charging higher prices/lower prices will lead to losing customers. Strike a balance and adapt intelligent pricing.
Measuring your competitor’s price performance can be helpful in understanding how you need to price your product. This can give you great insight into the pricing of your product and how to make it more competitive.
Improve product search performance
As we all agree, apart from content and page optimization, keyword identification, navigation optimization etc, the price of a product can play a major role in gaining visibility in the search results.
One of the biggest factors marketplaces like Amazon considers to determine predicted conversion rate is pricing – they know that customers tend to seek the best deals.
Amazon uses pricing as a major factor in picking which product to show in the buy box, which is the part of the page containing the Add to Cart button.
Although, let’s not forget that pricing alone cannot determine if the product will be purchased – customers are rational and they would consider other aspects like reviews and ratings. Pricing is one of the main factors and not the only factor.
Offering a good deal alone is not the big deal here.
Bump up your AOV (Average order value)
Increase your order size through intelligent pricing strategies:
Free shipping threshold
People are drawn towards free shipping. Try to include your free shipping offer with a price threshold on the home page – navigation area or header. This really helps in improving the chances of bulking up the order size.
Limited period offer
Shoppers tend to mull over purchase decisions if you simply give them offers. To increase purchases, you must add the element of “Offer expiry” to your pricing strategy to create an urge and impulsive buying.
Offering discounts on bulk purchases increase order value. Customers feel more satisfied as it gives them a sense of buying more products for a lesser price.
Although, you have to figure out the right discount value that wouldn’t throttle your profit margins.
Avoid shopping cart abandonment
The average rate at which the average consumer abandons their shopping cart before making a purchase is 81% .
There are a lot of reasons behind abandoning a purchase in the last moment of transaction.
But, let us pin our focus on the pricing front.
The price of the product that is displayed on the screen is not the definite and actual price that the consumer ultimately pays at the time of transaction. While the price cannot be inclusive of the shipping and other miscellaneous charges, making these policies transparent in the purchasing process can potentially decrease abandonment rates.
Consider a price adjustment to merchandise in order to offer flat-rate shipping.Remember that customers like to know that, apart from taxes they do not want to be surprised with shipping costs. Free standard shipping is a powerful closing tool.
If you opt to offer flat-rate or free shipping, be transparent about shipping method.
Improve customer satisfaction
Why is your favorite online store your favorite?
Isn’t it because it makes you feel happy in the heart and light in the wallet? Customer satisfaction can be closely linked to the repetitive purchases they make from you and how pricing has also contributed to the same.
Giving the best deals, offers, discounts and notifying your customers time and again about the price slashes really impresses the customers that would keep them satisfied.
Do we even have to discuss the benefits of customer satisfaction?
If you are there, well, you are the king!
What you need to think before choosing a pricing intelligence software?
- Before choosing the vendor, have a clarity on the size of the inventory or the number of products for which you would want to monitor the prices for
- How often do you want to be notified about your competitor price changes? Frequency of monitor – Real-time/daily/weekly reports should be decided
- If the price monitoring is for just the one product you are selling or whether prices of other products that could be purchased along needs to be monitored as well?
- If you have any specific suggestions as to a list of competitors that need to be monitored or a generic research-based price monitoring of your competitors
- If all that you need is only a price comparison report or custom reports to derive insights for decision making that gives pricing recommendations
- Of all, consider the cost of the tool and if it is within your affordability
Pricing intelligence is absolutely necessary for the success of a business. It needs to get full attention and the best pricing strategies should be in place to ensure that it doesn’t hinder the growth and profitability of the business. Visit our site to know more about our pricing intelligence solutions.
Blogger and Community Manager