How to build a winning pricing strategy for an online store
Basic pricing models for eCommerce include cost-plus, value-based, and rule-based pricing.
Retailers use various pricing models to pursue different business goals such as to increase the profit, market share or turnover, among others.
The pricing models can serve as a basis for an effective pricing strategy for an online store.
The Cost-Plus Pricing model is based on adding a fixed dollar or percentage to the product’s cost. This model does not require deep market understanding and is easy to apply.
The Value-Based Pricing model sets different prices for individual customers based on their perceived value.
The Rule-Based Pricing model uses specific predefined rules, which retailers set based on their business goals.
Effective eCommerce pricing strategies use the following rules:
1) An unreasonably high price diverts shoppers, especially in a highly competitive industry, e.g. electronics & computers
2) TAn unreasonably low price decreases margins and revenues.
The most balanced pricing strategies are primarily based on the customer price perception.Competera dynamic pricing benefits
According to statistics, eight out of ten customers compare prices in at least two stores before buying online. Therefore, retailers willing to attract and retain customers need to collect competitive data about pricing, promos, and stock to set optimal prices and increase their revenue.
Zero mistakes: unlike humans, machine algorithms do not make mistakes when collecting and processing data
Any amount of data: algorithms are able to analyze millions of prices
Scheduled delivery: automated solutions deliver data with customizable frequency