Profit margins are essential for the survival of any business, but is your pricing strategy optimized for profit? Improving margins is the top opportunity for pricing to contribute to retailers’ overall business strategy in the next two years, according to a recent survey. There’s a lot of room for growth because when retailers were asked how effective their pricing strategies were at driving top and bottom line results, only 27 percent said they were very effective, 62 percent somewhat effective, and 11 percent not effective at all.
Average profit margins for retailers are 20 percent to 50 percent. No matter where you fit within that range, there are many ways to increase your margins. Our new infographic lays out the top five ways online retailers can boost profit margins and improve pricing strategy. Here’s a little taste of the solutions our new infographic has to offer:
- Discount wisely: Provide a discount that shoppers can use if they spend a specific amount that is higher than your average order amount. This will make shoppers feel like they’re getting a deal and will help you boost your bottom line.
- Don’t get caught empty handed: Manage your inventory because if you don’t have what shoppers want, 77 percent will go elsewhere to find it.
- Price for profit: Being the lowest price is unsustainable and an outdated strategy. Get with the times and cash in because a dynamic pricing strategy can boost revenue by up to 8 percent and profit by up to 25 percent.
If you are curious about the rest of our tips (which I’m sure you are) you’re invited to check out the full infographic.