As a merchant, pricing should be at the very core of your business. After all, customers want to get their money’s worth. Of course, other factors come in to play when influencing a customer purchasing decision, but pricing is crucial.
In fact, pricing is now more critical than ever before.
Why? Well, there are millions of eCommerce stores out there, so competition is fierce.
Here’s the thing, customers aren’t afraid of going elsewhere if they can find the same or similar product elsewhere. So, you need to know all the tips and tricks to outdo your competition.
Here are five pricing strategies you need to know about.
Customers love a bargain or anything that will help them save money. Let’s say you wanted to buy a PS4. Without a game, the PS4 isn’t much use. The PS4 is expensive, and so are its games. But here’s where you get clever with your pricing strategy.
You throw together a bundle of PS4 and a game. Then highlight how much the customer will be saving if they bought the bundle instead of purchasing them separately. It’s a simple yet effective strategy that works every time.
As a merchant, discount pricing can eat into your profit margins, which isn’t ideal. However, when competition is so rife, discounting pricing is necessary. Plus, customers love a bargain.
And it isn’t all bad news. The occasional discount pricing can work wonders if you want to get people flooding to your store or are looking to target a wider audience. It’s also great if you want to get rid of slow-moving items or ones that are out of season.
If you have been in sales for a while, you will know that psychological pricing works. It may not be one of the apparent pricing strategies, but the science behind it gets customers to spend their money. The theory behind it is that consumers trust the odd numbers. And you see it all the time. Let’s say you have an item that is $200, but you price it as $199, the difference is only $1, but people are much more likely to buy it if they see $199 instead of $200.
Customers see this as a better deal. It’s important to note, though, that if you are a premium brand targeting high-end customers, this strategy may not necessarily work. It may be perceived as cheap or gimmicky. That’s why understanding your customer is essential.
It’s as the name suggests. You look at your competitor’s pricing, then set your prices lower. Again this dips into your profit margins, but if done right, it can be effective. Larger retailers can afford to implement this strategy. But, if you are a small retailer, it is a good idea to implement this strategy if you have high volumes of a product.
Buy Now Pay Later
Ok, so this isn’t a pricing strategy per se, but it is a payment method that will skyrocket your sales. If you haven’t implemented BNPL from providers that offer high approval rates like ChargeAfter.com yet, you need to do so ASAP.
That’s because BNPL, also known as consumer financing, is a payment method that customers actively look for before making their purchasing decision. BNPL comes with many benefits, both for you and the customer. The customers get to enjoy their goods without having to worry about the financial aspects. That’s because it allows them to break down the payments into flexible instalments that fit their financial needs. As for the merchant, you still get the sale.
So really, it’s a win-win situation.
BNPL later also opens a long-term line of communication between you and the customer. As a result, you get the chance to offer more upsells and incentives. You can always implement a reward system as a thank you for being loyal customers. When you offer BNPL, there is a much higher chance that customers will return and buy from you time and time again.
The Bottom Line
As a merchant, pricing strategies are something that you always have to change up and use different pricing strategies to stay ahead. The eCommerce world is moving at a fast pace and you need to make sure that you can keep up and try to be one step ahead at all times. If you haven’t already done so, start implementing these strategies but make sure you do it with your customer needs in mind.