Adopting an Effective E-commerce Pricing Strategy for Your Business
An effective e-commerce pricing strategy for your business can be vital in helping your marketing, promotion, and advertising plans succeed. Also, profitability is affected by your pricing strategy. So, make sure you prepare a good enough strategy that gives you the best chance of success.
Selecting an E-commerce Pricing Strategy
Things such as the size of the retail market, sales forecasts, international currency exchange risks, global as well as local emerging markets, global and local market volatility need to be considered while drafting a pricing strategy. Following are five ideas that will give you an indication of how to go about preparing an e-commerce strategy.
- Develop a unique selling point (USP) for your business. This can be anything that you do really well and is unique to you. It could be based on quality, cost, branding, niche market, or any other aspect of your business. For example, if your branding is related to luxury goods, then low-cost pricing is not going to be a very wise move. Luxury branding is normally associated with higher costs and is aimed at customers who are willing to pay the big bucks for these products. Such a pricing plan will certainly have a high-profit margin but an aggressive marketing strategy will probably have to be adopted. In a similar way, you can base your pricing strategy on cost or some other aspect that suits the nature and type of your product.
- Discounts and promotions are a great way to attract customers to your products and brand. You just need to be vigilant with regard to the impact on your profit margin and create discounts and promotions accordingly. There are generally two different ways in which you can offer discounts. It can be a separate pricing strategy or one that is supplemental to the main pricing plan. The first option is often enticing for existing customers whereas the second one is good for attracting new customers to your brand.
- Giving away freebies is another good way to increase sales as well as gain the trust and loyalty of customers, something that is of great importance in any business and in the building up of any brand. When you give any sort of incentive to your loyal and long-term customers and combine that with a competitive pricing strategy, it can be both highly effective for your brand as well as a challenge for your business. It’s effective because it helps build a strong brand name. However, at the same time, giving away significant amounts of free stuff will have an impact on your bottom-line and profitability. At the end of the day, it comes down to striking a balance between both things. If you can get that balance right, then giving away a few freebies every now and then can be great to boost your sales as well as build a better image of your brand.
- Allow some price flexibility. Whenever possible, give your customers the chance to bargain on the price. This is mostly for larger e-commerce companies and retailers, smaller ones wouldn’t quite be able to sustain this. A specific percentage and bargaining limit can be set. The key, as always, is to strike a balance between such offers and the impact they will have on your profitability. But if you can manage it well, it can be a good strategy. Customers will be really happy if you provide them with the option of bargaining on prices. This is a great way to earn their loyalty as well.
- Nothing works in this day and age without IT driving it forward. Making use of things like artificial intelligence and chat-bots can be good. Furthermore, investment in advertising and marketing expenses is not just important, it should be integrated well with your pricing strategy. Of course, such investments will have a cost. And if it is a large one, it will take a lot of time to have tax benefits as well as depreciation. Therefore, a cost on a monthly basis should be integrated into the final selling price of the product and this should be monitored for sales. Combine this with the use of a chat-bot that can inform a customer of a hidden offer available with online shopping. Furthermore, digital marketing is needed for your business as well as good SEO strategies.
These five strategies can be an effective pricing mechanism. Make use of them to grow your business exponentially.