The Price is (Usually) Right
It should come as a surprise to exactly no one that product pricing is the most prominent driving motivation behind purchasing decisions for more than 60 percent of people who shop online. The internet is a perfect venue for price-shopping; before ecommerce became a big thing, prospective buyers relied on search engines to comparison-shop.
Now that sites dedicated to performing meta-searches and offer best-price selections are flourishing—some estimate that one in five online shoppers consult them—it’s tempting to try to get in on that trend. Even if you don’t make the sale, your business is a discovery for someone who may be intrigued enough to come back.
Depending on your volume and longevity in the business, you may prefer to work on a cost-based pricing model. This is a non-discretionary mathematical formula that incorporates your cost of purchasing and your target profit, and assigns a price per unit.
Sounds simple? Perhaps. But there are variables that throw a monkey wrench into this strategy. Your actual wholesale cost may not reflect overhead and other factors that alter the per-unit cost you shell out.
An alternative to cost-based pricing revolves around the competitive nature of ecommerce, which is growing exponentially every year. It’s market-based pricing, and it requires constant monitoring of what your competitors are up to. Are several choosing to discount a particular line? To offer value-pricing through a special program? It will pay to find out.
Dynamic pricing is an intriguing option. Its strategy combines the cost-based with market-oriented pricing to achieve a number you can work with.
Finally, a savvy ecommerce player may choose to get up close and personal with customers and prospective customers, studying the buying habits of those shopping in your sector. If you’re wise to how targeted shoppers will choose their products, you will want to examine a consumer-oriented pricing model. The bonus of this pursuit is making inroads with your base and understanding not only how they make buying decisions, but how your comprehensive marketing approach impacts them.
Psychology Today
Once you’ve settled on a strategy for how to arrive at a per-unit pricing structure, go a bit beyond and use these tricks of the trade:
Charm-pricing, or the opposite of rounding up. A $7.99 price tag looks infinitely more palatable than an $8.00 price tag to value-oriented consumers.
Bigger is not always better! Smaller font sizes are known to entice with more regularity than larger ones.
Don’t get wordy. Fewer syllables in a price actually makes it sound less expensive. A consumer seeing “$97.99” sounds that out internally, and may feel more comfortable with “$99.10.” It’s a linguistic trick that successful sellers swear by.
Aside from these “on-paper” strategies, you should never forget the human nature of your clientele. Often that means consulting them directly. Focus groups, emailed surveys, and other outreach methods can deliver a wealth of information that helps you set not only pricing, but other parameters of your ecommerce business that will put you ahead of the game.