The 5 ingredients of an effective pricing strategy

Request a demo


Profile picture for user Angela de la Vieja

Angela de la Vieja

The importance of the price in the online purchase decision is very high, so defining an appropriate pricing strategy can be the difference between the success and failure of an eCommerce.

When we see the main players of electronic commerce, such as Amazon or Alibaba, we observe that they use dynamic pricing technologies, which allows them to make adjustments in their prices that are totally personalized and in real time.

If we the glass half empty, we could think that everything comes down to making large investments in technology, which is usually within the reach of very few, and that the competition battle is lost before we start.

But if we see the glass half full, we understand that it is not only about technology, and that by defining a pricing strategy we must combine strategic decisions and agile tools. With this need to be competitive in prices, there are five essential ingredients to consider:

1. Unique sales proposal

The unique value proposition, or USP for its acronym in English (Unique Sell Proposition), is the starting point for the pricing strategy. It is like the compass that marks the direction of the business. The unique proposal of sales is the reason why customers buy in an eCommerce,and it is what makes an online store stand out from others.

Each eCommerce develops its own proposal, which does not necessarily have to be linked to the price. The assortment of products, the exclusivity, the speed of delivery, the value of the brand, etc., are some of the usual proposals in an ecommerce. Each one must develop a solid and differentiated proposal that allows him to make a hole in the minds of the clients.

The great shoe eCommerce, Zappos, sells the same shoes as everyone else. However, their sales proposal is based on a very simple return process and excellent customer service. An unknown online store outside its local reach, Nerd Fitness, created its sales proposal using humour as a resource, and understanding very well the need of its potential customers: those 'geeks' who want to exercise, but who refuse to compete for the musculature.

2. Price per perceived value

The price based on the perceived value requires a deep knowledge of the potential clients and for this the communication actions are essential. Approaching customers and discussing this with them is the basis for obtaining accurate information about their interest in products, service quality, return policy, shipping costs, etc.

The prices based on value give solidity to the pricing strategy, strengthen the perception of the brand and create better relationships with customers.



3. Discount scales

This type of strategy assumes that customers will buy more products if the item proposed is below the usual market price.

Although it´s a strategy that must be managed with care, the interesting thing for an eCommerce is to apply it in products that allow them to minimize the acquisition cost per customer (CPA). In addition, it is a good starting point for cross-selling or up-selling actions that increase the total amount of the sale.

4. Offers

Discounts do not necessarily ensure sales, but they do generate attraction. The buyers are always struck by a great offer. A good policy of offers and discounts can be very positive in many aspects, from attracting new customers to rewarding the most loyal customers.

In essence, an offer can take three forms: a reduction of the price in percentage, a reduction of the price in amount, or simply, a very low new price.

Discount offers allow for a huge range of promotional actions, such as special offers, seasonal offers, offers for quantity, offer for renewal of stock, offer for removal of catalogue, anniversary offers, offers for festive events, and many more.

5. Monitoring

If the price is key in eCommerce, price intelligence should be a key part of the strategy.

The use of a competitive analysis tool allows obtaining very valuable information about competitors' prices, their references, stock, assortment, etc. With the functions of monitoring this type of tools, you can analyse price histories or identify trends to understand the movements of the competition and adjust prices.

In addition, competitive intelligence tools help eCommerce make short-term decisions, such as a promotional action; and long-term decisions to strengthen the pricing strategy.

Related Articles


Consumer behavior: How can behavior tracking be effective for setting the right pricing strategies?

Behavior tracking is becoming massively popular today. As a result, pricing strategies born from studying consumer behavior are a merchant's dream come true. If done right, it can conquer every market for the business quickly. With abundant data available, the strategic makeover of the pricing models is becoming easy for companies. 

What is behavioral tracking, and how is the data beneficial in pricing?

For a quick understanding, behavioral tracking refers to gaining in-depth knowledge and insights into consumers through their web data. Their browsing habits, spontaneous decisions, shopping interests, and preferences come under behavioral tracking. 

How can enterprises use customer behavior data?

Companies can use customer behavior data as a tool to strengthen their hold on the market. A customer’s preferences, values, and tendencies allow businesses to work in sync with them through the collected data. Apart from this, customer behavior can also aid in:

Tailoring customer needs for customer retention

Personalization is becoming the heart of a company’s growth. No matter in which area an enterprise is functioning, tailoring the services, products, and solutions is becoming increasingly crucial. Uniqueness and personalization attract the crowd like no other. 

Increasing the overall value

One of the best ways customer behavior data affects a business is by upgrading the value of customers for the business. The customer’s characteristics allow the company to target the people that match the business prospects well. 

Optimizing every type of content

Everything that is up for digital display requires content. You must have seen companies unveiling their products or services through advertisements and making the initial public appearance. Two essential sales strategies – upselling and cross-selling comes through content optimization.

Pricing Strategy

Last but certainly not least is the influence of customer behavior data on the pricing strategy. The pricing strategy essentially constitutes content derived from data analysis. Companies need to have a dynamic approach to the pricing system to attract the right customers. 


Saint Valentine’s Day, always a good opportunity

V-Day is looming, a long-awaited date for all and also a good occasion for the eCommerce. According the study conducted by Prosper Insights and Analytics, it is forecasted the average consumer expense that day will be the highest in last years. Furthermore, 25% of them will buy online, which means an increase of 4% regarding 2014 (The US department of Commerce). This is, therefore, a key date where market competitiveness increase and which could be assumed as a big opportunity for our business or, a big fail if we do not adopt the correct strategies.

How to turn this event into an opportunity? To achieve this goal, we need to adapt our prices to this hostile environment, i.e. we need to develop an appropriate Dynamic Pricing strategy that allows us to adapt our prices to the variations produced in supply and demand and to position us ahead of our competitors. In V-Day, the frequency in changes will be higher, carrying it out each hour or even each minute. It is estimated that 65% of leader retailers have the ability to respond quickly at these variations, such Amazon. For this reason, it acquires great importance the correct use of a software specialised in price motorisation of competitors. Do not miss the time and adapt your business to new adversities.


Which are the best footwear marketplaces to sell on?

Footwear marketplaces are booming. The last decade has seen the launch of new specialized marketplaces with millions of different users. Among them are Spartoo, Sarenza and Farfetch, portals with international reach. Their main value is that they unite hundreds of footwear brands, as well as offering clothes and accessories. Although each has its own characteristics, they are all vertical marketplaces, i.e., they focus on a specific area, and their sales categories are interrelated. For sellers, these portals provide an opportunity to expand sales channels and drive the globalization of their e-commerce business. We explain how to sell on these footwear marketplaces so that you can assess whether they align with your plans for the future and then start defining a possible pricing strategy.