Price has been named as one of the most important factors affecting online purchasing decisions. When purchasing products online, odds are your customer is going to hunt around to try and find the best price available. When picking your price points, it’s crucial to implement a pricing strategy that is effective. Focus on the factors listed below to help you when choosing your pricing.
1. Know your margins
It’s important to have a starting point for pricing your products. If you lower your prices too much, you may end up losing money due to pricing battles that can hurt you long term, even if you are selling a lot of products. It’s better to have an idea of your base price before getting started.
2. Understand Consumer Orientated Pricing
When starting the process of choosing your pricing, you should always have your customer in mind. Consumer orientated pricing asks two important questions “who is my customer?” and “what is my USP?” (unique selling proposition) For online retailers your USP could be free shipping or excellent customer service. Find something that can help set your site apart from your competitors.
3. Charm Pricing
This is a simple tool that is easy to implement. These are prices that end in 9. It's the simple tactic of making an item $19.99 instead of $20.00. While this may not be something you thought could have a large impact on your prices and buying margins, there is ample research that shows these “charm prices” effectively motivate buyers.
4. Simple Descriptions
When listing your items on your website, don’t become over zealous with long detailed descriptions. This can become overwhelming to your customers. No one wants to read a large paragraph of the item you are selling. Choose simple, concise words.
5. Offer buying incentive
Once you have figured out your margins and prices, you then can figure out how to offer buying incentives to motivate your customers to buy. If you can’t offer ultra low prices long term, you could offer flash sales, free shipping, coupon vouchers, etc to offer excitement and exclusivity.