Pricing research: What it is and how to do it

It analyses how demand varies within the market based on the prices set. It is a valuable resource for brands and retailers as it allows you to observe pricing behaviour and learn how pricing affects business growth and development.

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22/07/2022

Angela de la Vieja

Pricing research is a research method used to evaluate e-commerce product and service prices. It analyses how demand varies within the market based on the prices set. It is a valuable resource for brands and retailers as it allows you to observe pricing behaviour and learn how pricing affects business growth and development. Based on this knowledge, the ultimate goal of pricing research is to enable companies to define an appropriate pricing strategy to help improve their profitability.

Benefits of pricing research for e-commerce businesses

On the one hand, pricing research provides a benchmark framework. It allows you to define a range of prices you can move between without generating losses or affecting demand. Depending on the market’s context, you can raise or lower prices, within your established range, to increase sales or boost profits. It’s like having a more accurate guide to which strategies will be most successful.

This is why this information will be key when launching new products. For example, you can better understand the expected performance of penetration pricing when launching new items in a highly competitive market. At the same time, knowing your price range and position in relation to the competition helps you to get ahead of their moves and put forward better offers.

How to do pricing research

Before starting the research, it is vital to carry out preliminary data collection:

Calculate production costs: Consider all the costs involved for your business in producing and shipping each product. This will be your starting point for evaluating and setting prices.
Research the competition’s catalogue and prices: Start by selecting your direct competitors.
Select a sample of consumers: Pricing research involves sending surveys to a sample of customers to determine their opinion and their reactions to prices. Therefore, it is essential to select a representative group from your target markets to carry out the research. Also, for the research to be relevant, the sample must comprise people who need the product and would buy it at the right price.
Choosing a pricing research method: You can select different research methodologies, depending on your needs and objectives.

Van Westendorp: This method studies the prices that customers are willing to pay for different products.
Conjoint analysis: uses surveys to study users’ mental processes when making complex decisions.
Monadic testing: collects customers’ opinions about a concept or product, its attributes, and characteristics. Each item is analysed independently, without comparing it with others.
Gabor-Granger: attempts to define the elasticity of demand by asking survey respondents how likely they are to buy the product at a certain price.

Each methodology is different and useful for obtaining information that meets your needs. In the Van Westendorp method, the questions are open, and respondents indicate what prices they are willing to pay without bias. However, in the last technique, random prices are shown until the potential customer selects the price that they consider to be most appropriate.
Pricing research will help you update prices in your current catalogue and set prices for new products. Because there is a wealth of data, pricing tools can help you keep track of your price changes and how demand has responded. They also record your competitors’ prices. They provide a way to facilitate initial research and implement a new pricing strategy.

11/11/2022

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.

17/02/2015

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.

28/12/2022

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.