Product pricing has become one of the most important aspects of the eCommerce world today. When we talk about a suggested retail price, we don't mean that the price should always be low. Even though you would be able to make a lot of sales, you won’t generate any profit through this approach. Similarly, a high price may give you a lot of profit but hamper your online sales. This will have a loss on your market position and impact the long-term growth of your online business. If you want to make sure that your eCommerce website grows to further heights, you must have the right pricing tactics.
No matter how established a company is, it must be able to do its homework properly. Consumer trends, revenue targets, and marketing strategies are some elements that retailers prioritize. However, pricing a product isn’t just a matter of a few numbers. It also involves human behavior and its influence on our price perception.
What is a Retail List Price?
If you want to succeed in the eCommerce industry, you must know how to make the most out of a suggested retail price. The retail list price is defined as the markup of the invoice cost. It is important to note that the invoice is only related to the amount paid by the retailer to the wholesaler. It also includes the external costs required in running and promoting eCommerce products. You can calculate the profit margin by adding the invoice cost with the retail markup. This will give you an idea of the external costs required to run your online business.
Image taken from Strikingly User’s Website
It is also important not to confuse the suggested retail price with the retail list price. The latter term is defined as the price required to promote uniform prices across the stores where the product is getting sold. For example, you must go for the suggested price if you have put different high-ticket products on sales, such as vehicles, dining products, artwork, and appliances. The retail list price is the value in which the manufacturer sells its items to the wholesalers and retailers.
Best Pricing Tactics
1. Competitor Analysis
If you are struggling with your pricing strategy, you don’t need to worry. Many beginners in the world make incorrect estimates when it comes to their product value and eventually lose their credibility. However, they fall not because of a lack of knowledge. They don’t know what to do when they have stumbled. If you are not getting the correct estimate for your product, you must implement competitor analysis.
Image taken from Evolis
Regardless of what suggested retail price you choose, you must always look into your competitor’s methodologies. When we talk about the competitors, we don’t mean to say that you should copy-paste everything that they are doing. We suggest that you look at how their pricing strategies influence their online sales. By going through their strategy, you can use them to make your website better.
2. Keystone
Keystone pricing is one of the most straightforward pricing techniques that you will find in digital marketing. It is one of those pricing techniques that retailers use in the form of a guideline. If we define it in mathematical terms, it is when the retailer doubles the wholesale price of a particular product so they can achieve the suggested retail price. In this technique, you will see a lot of variation in the pricing results. They can either be extremely low, too high, or simply the right fit for your organization.
To achieve successful results, you must evaluate your pricing results comprehensively. Suppose you have eCommerce products with a minimized turnover and handling costs and are unique. In that case, you mustn’t consider this pricing technique and look for other alternatives. In such situations, a retailer can undoubtedly increase the suggested price of these trending products through a bigger markup formula. Therefore, you must be aware of the pricing techniques to use when in such situations.
3. Subscription-Based Pricing
Subscription-based pricing revolves around customers mainly. Your customers will pay you a regular amount over a selected period in this pricing technique. When we talk about subscription-based pricing, you can get a discount if you choose to be a member for years. If you continuously use the company products, they will only increase their overall cost.
Image taken from Strikingly
This pricing technique coincides with Strikingly’s membership subscription plan. By creating a membership plan for your website, you will have a chance to get recurring revenue. Apart from that, your members will also choose the accessible features through membership tiers. The more you pay, the more you receive, just like is the case with corporations that implement these suggested retail price tactics.
4. Dynamic Pricing
Dynamic pricing can also be termed “surge pricing” or “demand pricing”. It is a pricing technique in which the price of a product changes as per the market or consumer demands. For example, if Pizza Hut has been offering the same menu for the last decade, the demand for that pizza will decrease because other franchises in the market offer better menus, such as Forks and Knives. As you can suggest, dynamic pricing is usually used by restaurants.
However, hotels, airlines, event venues, and business stores are also using this pricing technique. Utility business stores use algorithms to check out the prices used by competitors, market demand, and other influential factors. By going through these terms, businesses get the right idea about the suggested retail price. They adjust their respective rates based on when and how much the customer wants to pay.
5. Penetration Pricing
Penetration pricing is a pricing technique in which a company comes to a market with a minimal price. By having a low price, they divert attention from all the competitors having a high price. However, penetration pricing is not a long-term strategy for achieving the suggested retail price and can only be used for a limited time. This pricing technique is appropriate for firms that have just started and are looking for clients.
6. Freemium Pricing
As you can see by the name, freemium is a combination of two words i.e. “free” and “premium”. It is a pricing technique where the company provides a basic version of its product. They provide this version hoping that the users will upgrade their plans to access more features. Freemium is owned by SaaS and other software organizations, opposite to cost-plus. They feel that this pricing technique is also a way to get to their suggested retail price ambitions.
Image taken from Strikingly
The business owners believe that restricted membership enables the users to taste the software’s full specifications while establishing trust before they make their buying decision. The website building service provided by Strikingly is a great example of a pricing plan. Apart from the premium services, Strikingly also offers a basic plan. You can get that basic plan by simply completing the registration process on our website. There are external features, such as domains for custom addresses, that users seem to enjoy.
Show Product Prices on Strikingly
If you want to make your mark in the eCommerce world, it is crucial that you consider the right website builders in this regard. Strikingly is the kind of website builder that helps you create prolific eCommerce websites. A free website builder allows you to create wonderful eCommerce websites without breaking a sweat. Once you have done all the homework related to the suggested retail price, it is important that you rely on Strikingly and showcase your final prices to the target audience.
Image taken from Strikingly
If you already have an online store on Strikingly, make sure that you adjust product prices accordingly so that your customers don’t feel confused.
You simply need to edit the product section on your Strikingly website. You will find a button “Add Sale Price”. Put the right value in that field and click the button. Once you are done with pricing, your price will be published alongside your product's image.
Conclusion
Pricing tactics have become increasingly important in the digital marketing world today. If you don’t know how to price your products, your credibility in the eCommerce world will go nowhere. You have to go through thousands of terms, such as profit margins, competition, customer demands, industry requirements, etc. However, the good news is that you don’t need to master all of these terms simultaneously.
In digital marketing, there are many things that we are not unaware of. Therefore, you need to sit back, relax, and look at all the important elements your company can benefit from. You must look at your business requirements, which will bring you to the best suggested retail price to employ. It is also important to know that implementing a pricing technique is an iterative process. It may take a lot of turns before you find the right price.
