7 Best E-Commerce Pricing Strategies to Increase Online Sales 2023

 7 Best E-Commerce Pricing Strategies to Increase Online Sales 2023

7 Best E-Commerce Pricing Strategies to Increase Online Sales 2023

Setting the right price for your product is a balancing act. Low prices are not always ideal, as the product may see a healthy flow in sales without making a profit. Similarly, when a product is overpriced, the retailer may sell less and lose market share to budget-conscious consumers.

Ultimately, every small business needs to do their homework. Retailers must consider factors such as production and business costs, consumer trends, revenue goals and competitive pricing. Yet pricing for a new product, or even an existing product line, is not just pure math. In fact, this may be the most straightforward step in the process.

The art of pricing requires you to calculate how much human behavior affects the pricing process.

To do this, you need to examine different pricing strategies, their emotional impact on your customers, and how to price your product. Below are the top 7 pricing strategies:-

1. Know the market.

You need to know how much customers will pay, as well as what competitors will charge. Then you can decide whether to match them or defeat them. Price matching alone is dangerous, though – you need to make sure all your costs – both direct and indirect – are covered.

2. Choose the best pricing strategy.

A mark-up percentage is added to cost with cost-plus pricing; This will vary between products, businesses and sectors. Value-based pricing is determined by how much value your customers attach to your product. Determine what your pricing strategy is before calculating.

3. Work out your expenses.

Include all direct costs, including money spent to produce the product or service. Then calculate your variable costs (supplies and materials, packaging and so on) – the more quantities you make or sell, the higher they will be. Find out what percentage of your fixed costs (overhead such as rent, rates and wages) the product will cover. Add all these costs together and divide by volume to produce a unit break-even figure.

4. Consider cost-plus pricing.

You need to add a margin or mark-up to your break-even point. It is usually expressed as break-even percentage. Industry norms, experience or market knowledge will help you determine the mark-up level. If the price seems too high, trim your expenses and lower the price accordingly. Be aware of the cost-plus price constraint, as it assumes you will sell all units. If you don't, your profits are low

5. Set a value based price.

Value-based pricing requires you to know your market well. For example, a hairdryer might cost £10 in the market. But if you are able to charge the customer ₹25 if that is the market price.

6. Think about other things.

How will the VAT charge affect the price? Can you keep some product margins smaller than others to achieve higher margin sales? You may need to calculate different prices for different regions, markets or online sales. Do you allow late payments by customers? Consider your payment terms and look at your cash flow.

7. You keep track of everything

Prices can rarely be fixed for long. Your costs, customers and competitors may change, so you need to adjust your prices to keep up with the market. Keep track of what's going on and talk to your customers regularly so your prices can be the best they can be.