If you understand how to price your products appropriately, you are destined to conquer the world of eCommerce. The lowest prices do not necessarily attract the most customers, as there won’t be much profit for the users to shout about. Similarly, high prices may result in few sales but there will be a substantial amount of profit for the business owners. To balance both sides of the seesaw, you need to create an effective pricing strategy.
Regardless of the dimension, every firm has objectives to meet. Company costs, consumer trends, and revenue targets are some elements that retailers must consider. When we talk about pricing products, it is just about putting a random price tag with an eCommerce product. There is a lot of analysis and calculations for you to go through before making a final decision.
Innovative Pricing Tactics
1. Subscription-Based Pricing
If you go with the plan of subscription-based pricing to understand how to price your products, you must note that you will receive regular payment from your customer over a certain period. If we talk about a subscription-based pricing strategy, you will realize that getting a membership for a reasonable number of years will get you a discount. The more you use a company’s eCommerce products, the lower their price will become.
Image taken from Strikingly
This pricing approach is similar to what Strikingly offers as a paid membership subscription. Creating one of your websites on Strikingly will give you a chance to earn recurring revenue. However, when you place a paid membership plan, you must make it clear to your visitors the value they will receive as members. For example, they must be aware of the paid-only eCommerce products or the website features that are only eligible for members. Sometimes, the website owners also tend to create blogs under the membership plan and can only be accessed by the members.
2. Keystone Pricing
Keystone pricing is a simple pricing technique retailers use as a guideline. If we define it another way, this pricing technique is used when a retailer doubles a product's wholesale price to achieve a desired retail price. If you want to know how to price your products, you must consider keystone pricing. It has a massive influence on pricing your products because you will see many instances in which the results are either too low or too high or just appropriate for your company.
If your eCommerce products have a limited turnover and are distinctive or short supply, keystone pricing is not the way to move forward. In these scenarios, a retailer may increase the suggested retail price of these trending products by going with a more significant markup formula.
3. Dynamic Pricing
Dynamic pricing strategy is an effective pricing strategy in today's eCommerce industry. If you want to know how to price your products, you might consider this approach because its price deviates from the market response and the consumer demand. For example, the masks didn’t have much importance until the second phase of 2019. However, by 2020, the significance of the masks increased due to the COVID-19 pandemic, which resulted in high market response. This caused the price of the mask to increase. This pricing technique is also referred to as surge, demand, and time-based pricing.
Dynamic pricing is usually associated with airlines, utility stores, event venues, and hotels. They use algorithms to do a competitor analysis in terms of pricing, demand, and other factors. These algorithms enable businesses to adjust the rates depending on the schedule and method where the customer is willing to pay. The input of customers has a lot of importance in dynamic pricing.
4. Freemium Pricing
For those who don’t know, “Freemium” is a combination of the words “free” and “premium”. This pricing technique is used when a particular company provides a basic version of its product with the hope of its visitors upgrading their plan to access more features. If you belong to SaaS or any popular software company, you would know how to price your products through freemium pricing. SaaS goes for this technique because restricted membership enables the customers to go through the full version of the software while also building trust before they buy it.
Image taken from Strikingly
If we talk about the pricing plan, you don’t need to look further than Strikingly. Like many other online platforms providing premium plans, Strikingly provides its customers with a free basic plan. This is a brilliant price because after the users visualize our web building service, they are likely to incorporate additional services in their working plans, such as the audience plan for live chats. They can also look for custom emails to create a dynamic look for their business emails.
5. Skimming Pricing
If you are part of a highly-established company, you must know how to price your products through a skimming pricing strategy. Various companies worldwide opt for this strategy when they consider the highest feasible price for a new eCommerce product and then lower the price once its recognition decreases in the market. The difference between skimming and high-low pricing is that the price of your products gradually decreases with time.
As the technology devices become less and less popular, such as DVD players, cassettes, cellphones, they get priced by this technique. Skimming pricing can guide pricing your products, especially in the digital market where the values of established products decrease with new innovations or more competition. However, this strategy can also frustrate the customers who paid the full price. If the attracted customers see a false price tag attached to a product after reducing prices, the online store may experience negative customer feedback.
6. Penetration Pricing
Penetration pricing is considered the opposite of skimming pricing when an organization enters a market with a low value. By having a low value, they divert the attention from the rest of their competitors. If you want to know how to price your products for the long term, penetration pricing isn’t the pricing technique. This technique isn’t sustainable for longer periods and is used for a limited time.
This technique for retail stores is considerable for firms that have just entered the market and looking to attract new clients. The retailers are looking forward to attracting businesses breaking into the crowded industry. Disruption and short-term loss are essential to the plan, and hoping that your initial customers will stay loyal to your store once the prices of your products go up.
7. Cost-Plus Pricing
The expenses for manufacturing your product or obtaining your services are one of the main objectives of the cost-plus pricing strategy. It is also referred to as markup pricing as various organizations use this strategy to mark up their items depending upon the profit they aspire to make. If you want to know how to price your products via cost-plus pricing, make sure that you increase your productivity levels by a substantial percentage.
For example, if you have an online business that sells football shoes, you would like to generate a profit of $25 per transaction. The reason is that football shoes require at least $25 to create. You will put a price tag of $50 on those shoes, which will be a 100% markup. Retailers that prefer physical eCommerce products usually go for a cost-plus pricing strategy. This methodology isn't for you if you own a SaaS business because their products are more valuable than the development cost.
Price Your Products on Your Strikingly Store
If you want to create a simple store on Strikingly, make sure you complete the registration process. The registration process will require your full name, password, and email address. Once you complete the registration process, you are ready to implement your finalized pricing tactics. To understand how to price your products on Strikingly, we have shared a set of guidelines for you below.
Image taken from Strikingly
- After signing up, you will be logged in. Click on “Build My Store” to get yourself started
- You will come to the website template section, where you choose one of the templates as per your will
- Customize your selected website template and click on “Add New Product”
Image taken from Strikingly
- You will come to the product section, where you must share the product image, name, weight, price, and many other attributes related to it. You must also select the product type option given at the top of the page
- Once you complete the info, you can save and publish the product on your eCommerce website.
Image taken from Strikingly.
Conclusion
When you step into the eCommerce industry, it is easy to get intimidated by various factors, such as consumer demands, profit margins, market research, and competition. You don't need to know how to price your products by going through these factors and becoming an eCommerce master. Make sure that you sit down, take a deep breath, and underline the most important things for your company.
When you conduct research related to your company, you have to start with the things you require the most, which will help you generate the most appropriate retail price plan to use.
Most importantly, you must know that pricing is an iterative process. It is like a game of hit and check, in which the first effort is likely to be wrong. After you try it a couple of times, you will get to your desired retail price plan. Once you get the right price for your products, make sure that you apply them to your business website right away.
