The Challenges of Setting the Right Price in Online Retail
Setting the right price in online retail can be difficult and time-consuming, but a good pricing strategy plays an important role in the success of your online business. When trying to set the right price for your products, you have to bear in mind many factors, and overcome some basic challenges. However, if you manage to do it right, you can expect a suitable award for it, and that award is your profit. In order to do a good job setting the price in online retail, you have to understand first, what are the challenges for this task.
Know Your Competition Pricing Strategy
Online retail is in expansion in the last decade. Especially after the pandemic, the eCommerce growth in the US jumps to more than 30%! This is a great opportunity for you to take your part of the cake, but it is also a great challenge since – when the market grows, the competition goes up, too. So, the challenge here is how to be better than all your competitors if you are selling the same product? The most obvious way, for sure, is to have a better price for the product. To do that – you need to know the pricing of your competition, and even better, you should know their pricing strategy.
You might say now – yes, it is obvious, but how can I know all the prices – all the time. It is true. This could be a very tough job for a person or even a team to look for the competition that sells the same products as you do and then checking their prices on a daily basis, but on the other hand, you have to admit that this would be amazingly valuable information to work with. It is not hard to imagine losing some customers because of a higher price. No need to worry here. There is a way to monitor competitions’ prices daily without even visiting their websites. The best way to do this is to use price monitoring software. This would give you a few advantages considering your pricing strategy:
- You can base your pricing strategy on your competitions’ prices;
- You can know your competitors’ pricing strategies by looking at historical data;
- You get to know whenever your competitor do some changes with the prices on their website;
- You can do better and sell more than the competition.
Manual Repricing vs. Automatic Repricing
You’ve overcome your first challenge successfully – now you have your pricing strategy all set and you know your competitions’ prices at any time. The next challenge on your way to becoming a prosperous online retailer is changing prices on your online shop promptly considering the fast-changing environment and circumstances. This means that you have to check, not only your competitions’ prices but your prices too – and if there is a need, change them. Things can get even more complicated if you have more than one way of selling your products online. For example, if you try to sell your products simultaneously on your website and Amazon, you will get yourself into multi-channel pricing, which could complicate your life even more. Manual repricing could be energy-draining and if you don’t have time to do it yourself, you will end up paying someone to do the work for you. This second option will save you some time but will be much more expensive. However, there is another, much faster and less expensive way of doing it. You can enjoy repricing software and all its advantages.
- It saves time
- Sale rises
- It can be very accurate if you know how to use it
There are also some disadvantages to this method. The most common cons of automated repricing are that it is not safe enough and some errors could happen in the process. This could be true on a certain level, but if you choose your repricing software wisely, and make sure that user approval is possible, there is no need to worry.
Branding and Pricing
There is an unbreakable connection between the price of your products and the brand awareness people have. You can trust us, your pricing strategy will directly affect consumers’ perception of your brand. This is the part where you have to be particularly careful. You have to consider – what would you like for people to think of your brand?
- If the answer is cheap then go ahead and lower the price. But this is a tricky part because if you are too inexpensive, people will tend to connect this to lower quality.
- If the answer is exclusive you can afford higher prices. Don’t forget to consider if there is a value behind those prices. Ask yourself what is it that makes your product special and better than your competitors’. Is it a better package, better customer support, or better service in general? If you don’t have the answer, maybe you should consider this a little more.
Making those decisions could be very difficult for you. The only thing that can make your life easier here is to look at the data. This can be very boring, after all, you are an online retailer, not a data analyst. The best way to do this part painlessly is to use a tool that will provide you with insights and data you need in a way you can easily understand.
Setting the right price and maintaining it can get complicated. If this is not your only task, and you have to do a bunch of work next to it, considering your online retail business, the best solution for you is to get yourself a helping hand in the form of software. If you want to consider this a bit more, we recommend you try the Price2spy for free next 30 days!