Price Management

eCommerce Pricing Optimization: In-house vs. Third Party Solutions

According to The E-Tailing Group, 94% of consumers are willing to invest time into comparison price shopping to make sure they’re getting the best deal possible. The importance of price on purchasing decisions makes it critical for retailers wanting to compete to be able to respond to the market in real-time.

Whether you’re a brand exploring ways to optimize price on your direct-to-consumer site, a brand or retailer with brick-and-mortar presence, a mail-order business trying to expand your footprint in the online world, or a multichannel retailer with significant traffic across your channels, now is the time to start looking into ways to make sure you can keep up with consumers’ changing habits – and capture more business efficiently.

To ensure you’re well positioned to respond, you want tools and technology that will allow you to respond quickly across channels and at scale so you can continue to achieve your business goals. As there is no one-size fits-all approach, you may be thinking of how to build this technology in-house. We’ll address whether it makes more sense to build your own pricing tools, or to partner with a third party service provider to drive more profitable growth for your business.

Defining Your Goals

To grow sales as a retailer, you have two key areas of focus. The first is driving new and existing visitors to your website so your products have the level of exposure needed to generate sales. The second is making the customer experience on your website streamlined and efficient, with pricing that’s competitive so that people are willing to buy from you.

One of the easiest ways to accomplish these goals is through acquiring competitor data. One of the biggest questions retailers ask themselves is “Who else is selling my products online?” Using your product data to match and compare your prices against the landscape can identify your main competitors and help answer the question “How are my products being priced?” The key to price optimization lies in how you manipulate competitor data in conjunction with other data points to find your pricing sweet spots.

Take a look at what you’re doing today. Are you manually reviewing competitor prices as part of your pricing strategy? How much time and what resources are you devoting to this effort? Manual monitoring is an incredibly tedious task and there are a number of limitations including (but not limited to):

  • How many products you can monitor (do you have thousands of SKUs?) and across how many channels (are you selling on multiple marketplaces and webstores?)
  • How often you can monitor prices (every couple weeks, monthly, or daily?)
  • How quickly you can respond to price changes in real time

It’s also important to track your internal sales data with respect to your pricing data. What are the relationships between your price changes and your sales performance? It’s important to have the ability to use these two databases to identify causation or correlation in order to help you discover what changes are actually working well and having a quantifiable impact on your business.

What to Look for in a Solution

When you’re looking for a solution to the challenges you face as a retailer on a day to day basis, you have to consider a few things to make sure you get the most out of a system.

  • Does it monitor every channel you sell on?

Having a solution that can cater to each of your selling channels is going to be the easiest way to keep your business’ pricing strategy organized. You don’t want to spend time and resources building out a new solution for each of your channels, whether it’s a webstore or an Amazon store. Visualizing data from different channels on one interface can keep you in full control of your business.

  • If you choose to go with a third party solution, is it reputable?

If you hire a plumber to fix your pipes, you’re going to do a Yelp search, right? Proven track records build credibility and reduce the fear of buyer’s remorse. Do your research, and look for familiar brands on their site. Case studies, testimonials, and more should be evident as well.

  • Is it taking all the necessary data into account to make informed pricing decisions?

Are you capturing and integrating multiple pricing variables that may influence finding the right price at any given point in time? Could different prices warrant different results? How are you going to check that? Price testing and dynamic pricing are becoming the norm in eCommerce, and you’re going to have to successfully implement them to keep up with competitive pressures in a dynamic market.

  • What level of support is needed to ensure that the system is able to scale with changes in the competitive landscape?

Scalability is another important factor. eCommerce is a dynamic industry. Your competitors are always changing prices, can your system keep up? SKUs can change and oftentimes retailers increase their SKU count, can you keep up with that? Find a solution that can quickly adapt to any changes sparked by both other companies and your own company.

  • Can it properly manipulate data?

Collecting data is one thing, but if someone still has to analyze the raw data each time, the process will not be scalable. You’ll want the ability to visualize everything in one easy to read dashboard that analyzes the data in real-time to give you the actionable insights you need to help you make smarter pricing decisions.

  • Can you measure the impact?

Since you’re investing the money into a pricing platform, you need to be able to see the impact it’s having on your business, whether it be on revenue, profit, or conversions, in order to track your ROI. Having the ability to measure the change in sales before and after you implemented your new system, and with each price change or price test you run, allows you to justify the impact, and improve upon each iteration.

  • Can you learn from its reports?

Invest in a solution that can generate periodic reports that are easy to read and understand. Your reports should contain actionable insights, not just raw data, and should help drive any hypotheses you want to test. Just like you would A/B test your store’s layout, A/B testing pricing strategies is a great way to help iteratively test different strategies and continue to improve them over time.

  • Is it customizable?

Do you want to search for a specific competitor? Or only look at how you’re performing at a brand-level? You want to make sure your dashboard has the ability to implement custom filters to narrow product data accordingly. It’s important to have this type of flexibility to slice and dice your data, because you may need different snapshots of your data set throughout different days or for specific circumstances.

Third party solutions are more often than not better designed for adaptability and scalability. With teams of dedicated customer account managers and product development teams continuously optimizing the product, it’s often a better decision to go third party if you don’t already have the existing resources in-house. This isn’t their first rodeo so to speak, and their experience can can be a valuable addition to your team’s efforts to improve your strategies. Oftentimes you will find that they are able to bring fresh perspectives to the table to help you optimize your pricing.


When it comes to the challenges you face in eCommerce, specifically your pricing, there isn’t a one-size fits all approach. An in-house solution might make sense depending on your current resources and needs, but how will they evolve over time?

Just remember, your goal isn’t to have a solution that meets your needs just today, but one that can evolve and meet your needs in the future as the landscape continues to change.

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Better decisions can only come from better data.

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