It can be difficult to find a competitive pricing strategy when you are a successful online retailer. You need to consider your profit margins and determine how low you can actually go while still making money on a sale. From using prices that end in the number 9 to offering incentives, below are six best practices that will allow you to reprice your goods and services while avoiding losses.
Consider a Flat Rate Pricing Strategy
Whether you offer many similar goods or subscription-based services, a flat rate pricing strategy may be just the thing you need to encourage your website visitors to complete a purchase. This works particularly well for e-commerce merchants who sell magazines subscriptions, social gaming subscriptions, computer repair services, online dating services, nutraceuticals, weight loss supplements, and legal online pharmaceuticals.
For instance, the online and brick-and-mortar store Dollar Tree offers all of its goods for $1 and dating website Match.com offers subscriptions starting at $30. However, keep in mind that this pricing strategy may not work well for all business models.
Repricing with the Number 9
According to KissMetrics.com, prices ending in the number 9 is a strategy known as charm pricing. “In his book Priceless, William Poundstone dissects eight different studies on the use of charm prices, and found that, on average, they increased sales by 24%.” Moreover, students from MIT and the University of Chicago conducted an experiment with the price of women’s clothing. They listed the same item at $34, $39, and $44 and found that the item listed for $39 sold even better than the item listed for $34.
Offer Special Prices
Similar to flat-rate pricing, you can use a special pricing strategy. You can organize this strategy to work in various different ways. Below are some examples.
For business owners who operate both an e-commerce and a storefront shop, you can offer goods through your e-commerce store at a special web-only price. This will indicate to online shoppers that they are receiving the lowest possible price when shopping on your website.
If you provide downloadable goods as well as web-based goods—such as educational software or a forex trading application—you can offer a special download-only price. This will also encourage shoppers to believe they are receiving the lowest possible prices when opting for the downloadable goods.
Another way to offer special prices is through a subscription. For e-commerce merchants who provide online news, dating services, streaming videos, or something of the like, you can offer a subscription-only price that offers additional features than without the subscription. For instance, if you offer streaming videos, your subscription package can offer higher-quality videos, a larger variety of videos, or even longer videos.
Offer Free Shipping on Purchases of More Than $50
Let’s say that your pricing strategy on some of your goods has lowered profit margins and you need a way to ensure success for your business. One way to do so is by encouraging customers to buy more so they can receive free shipping. However, keep in mind that you can raise or reduce the amount by which you want to offer free shipping—$20, $30, $60, $100, or more depending on what you sell.
Use Incentives to Drive Sales and Generate Returning Customers
There are many types of incentives you can offer that will help you drive sales, generate returning customers, and even encourage customer loyalty. Below are just a few examples.
- Buy one get one free (BOGO)
- Buy one get one 50% off
- Email-only promotions for new items
- Spend $50 and earn 25% off of your next purchase
- Earn points toward a free gift, discount, or free shipping
- Distribute weekly, bi-weekly, or monthly emails that offer coupons and sales information
Monitor Your Competition
The best way to create a valuable pricing strategy for your e-commerce store is by analyzing and monitoring your competition with Repricing Solutions such as Wiser (disclosure: I’m a co-founder). Through the application, you can track the pricing strategy from as few or as many competitors as you wish. You can also set your own repricing parameters as well as synchronize Wiser to your storefront shopping cart.