There are many pricing strategies out there. There are almost as many strategies in online stores as there are objectives and consumer profiles to target. The best pricing strategy for each eCommerce business will depend on many factors, but some offer guaranteed effectiveness, as long as they suit the criteria of your audience and the status of your eCommerce business.
The objective of all these pricing strategies is to improve the profits of your eCommerce business, regardless of the method, whether this is by increasing the average sale amount, offloading the less attractive products from your warehouses, or making the most of your relationship with potential customers. However, you must not lose sight of the fact that these must be aligned with the commercial objective of the online store at all times.
The truth is that the best pricing strategy to sell more in your eCommerce business will be the one that adapts to both the needs of the business and the market. So, what is the most appropriate strategy for your case? Here, we’ll look at the 5 key pricing strategies to sell more in your eCommerce business based on different objectives.
Entering the market: penetration pricing
If you’ve just launched your eCommerce business in a new market or even if you’ve just begun your activity in the market, you need your online store to be as attractive to your target audience and as competitive as possible. Here, a penetration pricing strategy would be the best option.
This type of strategy is characterised by its focus on fairly low prices with a high rate of improvement, which will allow you to enter a market that is already in motion with great reception from the public. The ideal partner for this would be a good omnichannel marketing strategy that will help you reinforce your launch.
Selling unique items: inflated prices
In inflated pricing strategies or price skimming strategies, you will give an item a much higher price based on having a very low supply of the product or it being almost exclusive to your eCommerce business. As new competitors appear, the price will be reduced and stabilise, creating a regulating trend in the market.
The main advantage of this type of pricing strategy is that it allows you to enjoy much larger profits in the first sales. With a demand that is either growing or stable, you will have a much larger profit margin before the valley moment arrives.
Great added value: premium prices
A premium pricing strategy is perfect for small eCommerce businesses with a reduced range of products and a high level of specialisation. These make the purchase and the product as well as the consumer experience more dynamic and provide greater added value. This type of pricing strategy centres around balancing this commitment to the added value of the brand as a differentiating element.
A premium pricing strategy allows for greater profits when faced with the expectation of a lower volume of sales. However, this is also the perfect lure in certain sectors, such as luxury good, which is largely driven by the perception of the brand created by high prices.
Competing in a very competitive brand: psychological pricing
Psychological pricing is a strategy that plays with the ways that you display your prices to have certain effects on the consumer. Psychological pricing strategies use these resources to find the perfect way to make your prices more attractive to potential customers.
This type of strategy has more to do with finding that differentiating element in the prices displayed than the economic value in itself. For example, depending on the sectors or expenditure levels, a price with decimal points may be more acceptable than those without. In a drugstore, rounded prices of €1 or €2 might attract attention, even though they’re higher than the often used €0.99.
This type of pricing strategy is perfect for highly competitive sectors since it will help you gain more attention from the target audience than the remaining online stores and brands, meaning that you’ll earn a larger share of the market and a more positive brand image.
Tackling extreme competition: direct discounts
Finally, we’ve arrived at the most widespread strategy of all: offers and discounts in precise amounts. This type of pricing strategy is the most common since it can be executed at any time, through campaigns or simply to empty the warehouse of products that are no longer attractive.
Here, the most important thing to consider is which products you want to offer with a discount. This is important at all times and should be based on seasonality or any other factor that might come into play, such as the profit margins you need to maintain the health of your eCommerce business while remaining competitive.
In any of the cases that we’ve shown above, you must have a competitor price monitoring tool to know in detail how the market functions as well as the types of strategies and prices your competitors are using. How else can you make the best decisions for your business?