Any online store must have a pricing strategy so they can grow. But if pricing a product or service is complicated, creating a pricing strategy is even more difficult if you do not know how to do it properly. PriceTweakers can help you with setting the correct pricing strategy for your products and tracking your competitors.
Once you have your pricing strategy or strategies, you have a guide that allows you to navigate through the eCommerce world. Nonetheless, companies can make mistakes. Now, we are going to discuss the most frequent errors companies make in their pricing strategies.
1- Low prices
Offering low prices to your customers might be a good idea in specific situations. For example, if your company is planning to enter a new market. However, in the long run, you should not stick to this idea. While low prices might get you more sales, you do not generate any profits, thus damaging your margins. Also, if you keep your products' prices low and then decide to increase them, customers will not like this. Since they became accustomed to your low prices, they will leave you and go to your competitors.
2- Not updating your prices
It is usual that companies use a pricing strategy and do not make changes. That is a huge mistake, particularly if you don’t modify the prices of your products or services. Often, you have to make adjustments to stay competitive.
If you leave your prices the same, you will lose ground with your competitors and money. In the online world, the prices of your products must be dynamic. You have to adjust the prices of your products continuously, depending on many factors, such as supply and demand and other factors. Why is Amazon on top of many marketplaces? Well, because they change the prices on their products 2.5 million times a day.
3- Limiting buying options to consumers
Offering a single-price option to clients is a bad idea. If you can create necessities for consumers that boost your sales, go for it. By price options, we mean selling products by unit, which reduces the price as quantity increases. Or selling products in a bundle at a lower unit price. Also, another tactic is to implement is to offer similar products but with different quality. That approach allows companies to understand the client whether he chooses the product based on price or quality.
An experiment conducted by William Poundstone and explained in his book Priceless supports this theory. In the first test, they offered people two kinds of beer. A bargain one for $1.80 and a premium one for $2.50. 20% chose the first one, and 80% chose the expensive beer.
For the second attempt, they added a third option, a super cheap beer for $1.60. 20% picked the $2.50 beer, 80% the $1.80 beer. Nobody chose the bargain option. For the third try, they used three beers: $1.80, $2.50 (premium), and $3.40 (super premium). Guess what happened? 85% chose the 2.50 beer, 10% the $3.40, and only 5% picked the cheap beer.
Conclusion
Most of the mistakes happen because you are not paying attention to your strategy or because you think once it starts running, you do not have to make adjustments. PriceTweakers offers your company control over your pricing strategies, price monitoring, competitor monitoring, dynamic pricing, and much more. The program works 24/7 and gives you the best data regarding your competitors and market insights. Are you interested? Contact us for more information.
