Top 6 Pricing Methods
to Become a Retail Winner
Companies have a variety of pricing methods to choose from that are
founded by either a single or a mixture of one of the umbrella terms: cost,
demand, and competition. But what exactly is a pricing method?
The examples of such factors include the competition, demand patterns, pricing rules, product type, etc.
How to choose methods of pricing
It means that for some products, like KVIs, it is crucial to consider the market trends and other players’ prices which means that a competition-based pricing method would be the most appropriate.
In contrast, for other types of SKUs, the demand-based pricing method would fit best. That’s why the data-driven portfolio segmentation is crucial while choosing the pricing method.
Common Pricing Challenges You Overcome With Competera
Considering your pricing method, Competera offers a unique technology blend to make your pricing easy and effective.
What are the main strategies and pricing tactics?
It’s imperative to choose the right method, or a combination of them, or else your company is headed towards the gutter. It’s recommended to use a flexible pricing strategy combining the elements of different pricing method for each product type or portfolio segment.
Which pricing method is yours?
Once you know what is pricing method, select the right pricing strategy for products or a combination of them.
6
Top methods of pricing include
Competition-based pricing
Demand-based pricing
Cost-plus
pricing
Value-based pricing
Psychological pricing
Price leadership pricing
Competition-based pricing
Example of use: a data monitoring tool tracks the competitors’ prices in real-time and once a price per particular SKU is detected, retailer’s price for the same or similar product is adjusted automatically
Psychological-based pricing
Example of use: products are priced a cent under the full dollar, e.g. $5.99 instead of $6. The idea is that such a price looks more appealing for customers while the financial difference is insignificant for the business
Cost-based pricing
Example of use: an AI algorithm processes millions of historical and fresh data points to reveal both the implicit and explicit dependencies between particular price changes and responses of the demand curve. Based on the findings, the price recommendations are generated by the pricing system
Value-based pricing
Example of use: because of a popular brand and customers’ high willingness to pay, a seller sets up a price which is much higher compared to the product’s production cost. The last collection Gucci handbag could be used as an example of SKU towards which
value-basedpricing is applied.
Price leadership pricing
Example of use: If a unique product is introduced, a retailer is the first to set up the price and, eventually, become a pricing leader. In contrast, reacting to competitors’ prices (like, in the competition-based pricing) would be an example of price followership
method.
Demand-based pricing
Example of use: an AI algorithm processes millions of historical and fresh data points to reveal both the implicit and explicit dependencies between particular price changes and responses of the demand curve. Based on the findings, the price recommendations are generated by the pricing system.
Software to power your pricing
Competera is an industry standard software offering a unique technology blend to manage different pricing method easily and effectively
