Pricing is a special study in and of itself – it’s a complicated subject, not only because the competition tends to force you in one direction or another, but also because it’s directly tied with volume, the amount of sales you need to clear before you start making profit. The price of your product or service should never be your expense plus a mark-up for profit; that’s often the wrong approach. Pricing is a very powerful marketing tool.
It’s tricky, but it doesn’t have to be complicated, according to Amazon repricing specialists from Feedvisor – all you need is the right approach. How important is the right pricing in e-commerce? Here are your most crucial questions answered.
Why price is more important in e-commerce
When customers walk into a brick-and-mortar establishment, their decision to buy or not to buy doesn’t only depend on the product and the price. Often the customer is influenced subconsciously by other factors such as the lighting, the background music, the ads, the smell of cookies, and so on.
Businesses online do not have the advantage of providing this subtle encouragement; in fact, they can’t even let the customer touch and feel the product. For these reasons, pricing is incredibly important in e-commerce, more so than in traditional stores.
The experience of buying something online is quite different from that in a brick-and-mortar establishment, and this has made the online buyer a very objective buyer – it’s very easy for him or her to compare prices, buying options, reviews, and delivery methods. It’s another reason why your pricing is so important.
Factors to consider
When you think about pricing, think about the following:
- Competitors and market share
- Conversion rates
- Brand image
- Profit margin and volume
- Add-ons and deals
- Future sales
- Marketing schemes
Just because your prices are higher than average doesn’t mean you’ll have low sales, and just because you have a superior product doesn’t mean you can’t sell at a lower price. You have the opportunity to sell, so make sure your sales pitch is loud and clear, and that your target demographic feels your pricing is justified for what they are getting.
Here’s something that you have to remember at all times: pricing is not a static act; it’s a lot more than simply making some calculations and a decision, and putting a price on your product. Pricing is a dynamic strategy whereby you adjust your prices according to circumstances, such as competitor reactions, seasonal fluctuations, volume of purchase, marketing campaigns, and so on. It’s a way to maximize profit and accomplish marketing goals at the same time. It’s an important part of growth.