Defining a pricing strategy suitable for your e-commerce is a crucial step toward optimizing sales and future consolidation of the business. Incorporating new products into the market with competitive prices can affect the profitability of the business and hurt the brand image. To avoid this, you should firstly perform an analysis of competition prices so you have a general idea of the market situation. Once you are developing your pricing strategy, we recommend avoiding the following common errors when setting prices to favor the growth of your e-commerce.
1.- Opting for lower prices
Even though setting prices below the average market value can be attractive for users of new brands, also known as penetration pricing, in the long term this can create risks for the e-commerce. These prices generate a low profit that slows down the business’s growth. At the same time, if clients are used to those set prices, they will no be satisfied with an increase and will turn to your competition, other brands.
On the contrary, it may be good practice to start with similar prices or those higher than your competition’s when you are planning different campaign offers to meet your market objectives. Whenever there is pretext, be it summer sales or stock clearance, discounts can be applied to prices to foment the acquisition of a large number of clients. Remember to emphasize that something is temporary, and after a certain amount of time, the previous prices will be reestablished.
2.- Limiting consumer buying options
Why only offer a single price to clients? Limiting the decision-making capacity of users reduces purchasing possibilities, while, when offering different options at different prices, we are creating new necessities that users didn’t know they had. We are talking about, for example, the possibility of selling products by units, reducing the price as the quantity increases, or selling products in packs at a lower unit price.
On the other hand, you can also incorporate similar products but with a different quality or category, in a way that the user gets to choose whether quality or price is more important. This allows you to reach two segments of your audience at the same time.
3.- Not updating e-commerce prices
Maintaining static prices more or less on the long term will provoke competition to exceed your e-commerce sales by adopting more quickly to changes in the habits of consumers. In the online market, prices should be dynamic and adjust themselves continually to the supply and demand, otherwise, you can fall behind. Even more so in marketplaces. The clearest example of this can be found within Amazon, where product prices can change many times in just one day. This strategy is achieved using dynamic pricing, the formula that streamlines decision making.
To avoid these errors and to keep exhaustive control over the prices of different products and services of your e-commerce, a good option is to arrange a complete suite pricing. These online tools allow for collection and management of all the information of interest about the business and its competitors to implement and set adequate prices.