The Proven Retail Pricing Strategies for E-commerce

Best practices in price monitoring 10.11.2021. Reading Time: 3 minutes


No matter if you have the best product or service in the world, if you don’t have solid marketing and pricing strategies you may be doomed in the current competitive world. When determining a product or brand’s offer as a key component of the marketing mix[i], pricing plays a critical role.

So, when it comes to pricing, there are several proven tricks that companies may use depending on their own marketing goals.

Premium Pricing
It’s also known as image pricing or prestige pricing. Premium pricing establishes a price higher than the competitors’ for similar products. This strategy is mostly used when there is something unique about the product / service. It’s useful to maximize profit in areas where customers are happy to pay more, i.e. where there are no legitimate substitutes for the product.

Competitive Pricing
Competitive pricing means setting the price of a product or service at the same level as the competitors’ prices. This pricing method is often used within well-established and highly competitive markets for the same or similar products. Due to unsteady market conditions retailers must be fully informed of their competitors’ prices day by day and this process needs to be continuous. Therefore, it’s more practical for companies to use a competitive pricing intelligence tool. If you’d like to learn more about this approach, please click here.

Economy Pricing
Economy pricing strategy, based on low-cost approach to marketing, holds to no special rules: just the keep prices low as much as possible and attract a specific segment of the market that is very price-sensitive. This practice of pricing is most commonly-used by big vendors, such as Wal-Mart.

Penetration Pricing
Penetration pricing refers to a marketing strategy used by businesses to attract customers to a new product or service. Penetration pricing is the practice of offering a low price for a new product or service during its initial offering in order to allure customers into your own offer and keep them away from competitors. This marketing strategy relies on the idea that low prices can help make a customer aware of and more willing to buy a new product.

Psychological Pricing
Psychological pricing (also price ending, charm pricing) is a pricing/marketing strategy based on the theory that certain prices have a psychological impact. The odd pricing strategy tells us to price products just below the whole dollar / hundred amount. For example, 99USD is psychologically “less” in the minds of consumers than 100USD. It’s a minor distinction that can make a big difference.

Promotional Pricing
Promotional pricing is the sales promotion technique that is based on short-term reducing of the price of a product / services to attract more customers and increase the sales volume. This strategy is quite popular among retailers. There are many types of promotional pricing such as ‘buy one – get one for free’, money-off vouchers and discounts.

Price Skimming
Price skimming can be considered as a form of price discrimination. After the release of a new product, a very high price is set at first in order to maximize profit by selling the goods to potential customers. And then, the price slowly decreases with time in order to maximize profit by selling the product to other types of customers. For instance, Apple is well-known for its skimming pricing.

Wrapping it up

Depending on the industry, applying any of the pricing strategies that is listed above can help you get one step closer to your business goals. But, since the topic of pricing strategies is very complex, it’s always useful to check some other opinions. Here’s a good sample provided by Toptal, explaining a pricing strategy overview for consumer companies in depth.

Which pricing strategy do you prefer to use for your e-commerce? Let us know down in the comments below!

[i] The marketing mix refers to a set of actions or tactics that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix – Price, Product, Promotion and Place.


Cahide Gunes Pakay
Cahide Gunes Pakay is a Digital Marketing Manager at Price2Spy, an online price monitoring, pricing analytics, and repricing tool used by eCommerce professionals from all over the world. She loves reading, writing, and speaking about e-commerce, pricing, and competitive strategies. You can find her on LinkedIn.