Smart Pricing for your Product
April 30, 2018
Smart Pricing for Your Product
Whether you are just starting your business, or you have been at it for a while, one question you need to ask yourself is how you should price your products. Setting a price at the beginning of your business and keeping it the same year after year is not the best pricing practice. Every eCommerce business needs to have a great pricing strategy in order to succeed! You want to be able to make a great profit, but you also want to keep the prices enticing so that customers keep coming back to you.
With all of your efforts to get customers to your site in the first place, make sure that they do not immediately leave because of bad pricing. Develop a strategy for pricing that will work with your marketing plan to draw customers to stay, rather than it being an invitation to leave your site and go elsewhere. How do you find the sweet spot of perfect pricing? Take a look at what we have found to be 3 smart and simple steps to find great pricing for your product.
1. Know your Market
Imagine shopping for a puppy. You know the exact breed you want, maybe it’s a German Shepherd, maybe it’s a Yorkshire Terrier. Regardless, you start looking different places. You see some that are way too expensive and some that seem a little too cheap. You also look at any extras like a leash, crate, or food for the dog. This is the same for selling your own product. Get online and find out what other sellers in your market are charging for their products. Pay particular attention to the stores that are doing well. This competition-based strategy of pricing is also called “market-oriented strategy” because you are analyzing your market and finding what your competitors charge for the same product. Once you have an idea of what those numbers are, you know the ball-park for what you could be charging.
From here, our recommendation is to shoot for the middle of the price range you found in your research. Here’s why: If a product is priced too high, it will deter people from buying from you. If you price too low, people will start wondering if there is something wrong with your product or service, just like with the puppy. Give your customers peace of mind, but also a great deal!
2. Know your Customer
Of course, there are always other factors that play into the market-based approach to pricing. You may want your brand to communicate that you have the highest quality out of anything else in the market. That would mean pricing at the upper limit, or even higher than the prices that you found. If your business would like to try a different approach, you can develop a strategy that prices towards the lower end to entice more customers.
Another way to price while thinking of the customer is to remember that there are always psychological factors to business decisions. A tip to price your products while keeping your customer in mind is to know that there are ways of presenting your pricing that customers will find more psychologically appealing. This includes the idea that people tend to go for items labeled $1.99 rather than $2.00 since the 1 stands out as a smaller number than the 2. This playing around with “odd numbers” has been proven successful time and time again, so it would benefit your business to incorportate this strategy into your pricing system!
3. Don’t Forget About Shipping
When running an eCommerce business, you need to remember that your customer is getting your product in the mail. Sometimes the price of shipping can be a deal breaker. It doesn’t matter if you’re having an amazing sale and your customer is elated to find that they can snag something they love for 50% off. If they see that shipping is more than they want to pay, they’ll leave it behind.
Finding and setting the right pricing for shipping can be tricky. You don’t want to spend too much of your profits on postage for shipping. Just the same, you shouldn't be spending excessive amounts of time packing and sending out orders to keep your customers happy. Once you get the hang of listing your products and setting the prices just right, the next step will be working out your best shipping process.