Roughly said, optimal pricing is based on three things. The first one is a team of motivated professionals who know how retail and markets work. The second is advanced software to collect and analyze big data. And the third thing is, essentially, an awareness of game-changing pricing trends. Otherwise, what’s the point of the most complex data sets if you don’t know how to use them?
Let’s get down to business and meet the main pricing trends to consider in 2020.
1. Digitalization and Price Transparency
The effects of price digitalization go farther than you might think. 89 percent of customers begin buying process with a search engine. Even if you operate only brick-and-mortar stores, digitalization still affects your performance remarkably: more than two-thirds of customers do online research while they are in physical stores.
What it means is that pricing becomes transparent. To keep abreast of competitors, retailers have to process large volumes of highly accurate data in real-time. Another tip: you have to win customers with better non-pricing offers. We’ve mentioned those things already: special proposals, delivery options, better portfolio, stock availability, promo or credit conditions.
2. Consumers love value-based pricing
To grasp the way value-based pricing works, you need to track consumer trends thoroughly. People are eager to go into brands more than anytime before. Value-based pricing means you can charge more money on particular products and steer shoppers to buy premium offers.
Using value-based pricing implies significant risks to your team performance and company’s financial health. Imagine your demand prediction model failed and you are overstocked with branded goods that are no longer requested. Fortunately, the advanced pricing solutions can prevent you from such failures delivering the right insights at the right time.
3. Pricing gets even more dynamic
There’s nothing new about dynamic pricing. Airlines companies, accommodation booking websites, and retail trendsetters, like Amazon, adjust prices using big data for years. Now, after the post-recession technology boom, dynamic pricing is no longer a privilege of a few market leaders.
All types of retailers can now use dynamic pricing software to gain price recommendations based on competitors’ pricing, stock availability, promo, and other data. Just one example: you can charge more right after software notifies you of becoming a unique product seller.
4. Behavioral pricing: when tech meets psychology
Behavioral pricing is about both predicting a customer’s next purchase and influencing buying behavior at present. Based on purchases made today, advanced algorithms show retailers which categories or specific products would be a top request tomorrow.
Business can also shape consumer behavior in real-time. First, customers’ willingness-to-pay could be boosted through price differentiation based on clients’ value perception. Second, retailers’ portfolio could be optimized so more valuable products would get better sales. Third, using data on the related products combinations, cross-selling within a portfolio could be boosted.
5. Data-driven analytical insights is a new gamechanger
It’s not enough to access the most comprehensive and accurate data if you are not capable of using it the right way at the right time. That’s why retail top-performers already use solutions that can indicate the next best decision for their teams. Pricing becomes insight-driven.
With analytical insights, you can find new sales opportunities, get notified after you start losing money, prevent cannibalization, track the performance of each team member, and more. Software-generated insights are about to save plenty of time so retailers can focus on non-pricing competition and strategic stuff.
6. Omnichannel gets more influential
Diversified sales help retailers to increase their market share and client base. With the tech solutions available today, retailers can easily identify the most revenue-generating channels and adjust their pricing strategy.
For example, retailers can decide to charge more for products sold on Amazon compared to their own website. The secret is that corporate website visitors are likely interested in a whole portfolio rather than a single item. Besides, different channels attract various groups of customers and you need to consider that to secure sales.
7. Servitization and sympathetic pricing
Servitization strategy is praised by many retailers as it helps keeping revenues high over the long run. The idea is to give customers not only a single product but a set of additional services or sub-products necessary to maintain a smooth work. For example, if you sell electronics, you can also offer better warrant conditions or customize promos on the cross-sell products.
Sympathetic pricing takes various forms. It might help vulnerable groups to satisfy their needs, give better offers to express solidarity with the people of particular beliefs or help people to fight their everyday struggles. The trigger here is trust-building. You might drop your sales at first, but increase the group of loyal customers and win strategically. With advanced price optimization solutions, it is possible to test various pricing scenarios and see which approach is worth using right now.
Awareness of key pricing trends is crucial to enhance retailer’s strategy and decision-making. Advanced software, in turn, gains insights and defines the best fitting pricing approaches. After all, these are the people who implement decisions and bring recommendations to life.
We can help your team, each manager, and the whole business to become better. Explore our website and find how Competera can guide you through each stage of the journey to optimal pricing.