Few things are as important and as difficult to decide upon as a price point for your product. Set your prices too low and you won't be making the margins you need to turn a profit. Set them too high and you might start scaring away customers. It can feel as though settling on the perfect price is an impossible task, especially if your competitors seem to have come up with prices that don't make any sense to you. So how do you find the perfect price? Well, you shouldn't take the decision lightly. Finding the right price, while difficult, can also make a huge difference in your sales. We will take a look at different strategies you can use when pricing products online so that you increase sales and revenue.
What do your prices say about your brand?
Before you decide on any specific price, you need to decide on what your prices are going to say about your brand. This can be a difficult concept for many entrepreneurs to wrap their heads around, but it is important. When customers shop around for a product, even if they think they are shopping for the cheapest product, psychological factors are going to kick in that often lead them to choose a product that is priced differently from what they claimed they were looking for. Often, they will go for a brand that they trust or one that says something about their own lifestyle. Products may be useful, but they also say a lot about a person's personality. If you want to offer the lowest price point then, by all means, go ahead, but be sure to build a brand that is consistent with offering the lower price and be prepared to give up customers who are more likely to be concerned with product quality.
Online marketplace pricing
If, like many e-commerce sites, you are selling on Amazon then you need to be especially strategic about how you price your items. Most sellers on Amazon think only in terms of offering the lowest price and they will do everything possible to undercut the competition. A lot of sellers also believe that the only way they can get the Buy Box is by offering the cheapest price, even if it means they don't turn a profit. However, if you're not trying to turn a profit then you shouldn't be in the business of selling anything! When it comes to online marketplaces like Amazon you need to remember that price is not everything. Getting high reviews can count for just as much if not more than price, especially if there are many competitors offering the same product around the same price point. Selling your product just a fraction above what your competitors are selling their products for can give you the margins you need to succeed so long as your other metrics are solid. When it comes to online pricing, you can also make use of an algorithmic repricing tool, such as Feedvisor, which will help you zero in on the 'magic spot' when it comes to price.
Go big or go home?
Customers today are pretty savvy and because they can compare the same product over different platforms it is much easier for them to choose a seller who offers the lowest price. As a result, many retailers think only in terms of offering a price that is lower or comparable to what their competitors are offering. That's not a bad strategy, of course, but don't be shy about going in the other direction and pricing your products at substantially higher price points than what other businesses are offering. Again, the reason for the higher price point is entirely psychological and it goes back to building your brand. If you want to be known as a high-end and luxury retailer (and you want the profit margins that go along with it) then you have to start acting like the products you are selling are worth more than what your competitors are selling. Pricing high will allow you to focus on customers who are willing to pay more. Even if you make fewer sales, in the long run, you can build up a reputation as a premium brand and attract only customers who are willing to invest in something that is a quality product no matter the cost.
Finding the perfect price can feel like finding a needle in a haystack. While it may be a frustrating process, you do want to give plenty of thought to your products' prices. Not only will a well-priced product lead to greater sales and revenue for you, but it will also say a lot about what your company represents and what its brand can offer consumers.