eCommerce is currently all the rage. Customers can sit back in the comforts of their homes, browse millions of products, and receive them at their doorsteps.
The likes of Amazon and Target are well-known eCommerce giants. Besides them, there are thousands of eCommerce websites on the internet. So online shoppers have plenty of choices in deciding where they want to buy products.
eCommerce retailers that amass the most number of customers have one characteristic in common. That is a fantastic pricing strategy. Shoppers browsing their favorite products online perform extensive research on their prices. Strategically managing the cost of products attracts customers to make purchases from your eCommerce site.
How you price products in your eCommerce business impact your conversion rates significantly. We discuss industry-leading eCommerce pricing strategies that will drive your business to success. We go over nine types of strategies best deployed with a POS system. Let’s get started.
The penetration pricing strategy is best for introducing new products on your eCommerce platform. Getting customers to show interest in new arrivals can be a cumbersome task. It is more difficult when shoppers are already loyal to another brand. Penetration pricing requires you to lower the cost of new products. It persuades customers to purchase them.
Loss leader pricing
The loss leader pricing is about accruing customers on the eCommerce platform more than making a profit. This strategy is the best when you’re launching a brand new eCommerce business. The loss leader pricing requires you to lower your price so much that it puts you at a loss. That sacrifice gains you customers who may eventually buy products at regular prices, making up for the losses.
Most pricing strategies are based on reducing product costs. The price skimming strategy is the opposite. With this pricing strategy, you set high prices for exclusive products that customers want to get their hands on as soon as possible. The next-gen consoles Xbox Series X and PlayStation 5 employ a price skimming strategy due to their limited availability.
Dynamic pricing is also known as flexible pricing. This strategy requires you to continuously monitor competition and demand for products in the market. And according to them, you need to optimize item prices that align with your business goals. The best way to employ dynamic pricing is with a dedicated repricing software system.
The bundle pricing strategy is straightforward. You compile a wide range of products together for an offer price. The items you put together in the bundle must be related to each other. For example, podcast equipment. You can bundle up an audio interface, a microphone, and a pop filter for a discounted price. A Point of Sale software solution helps easily bundle up products.
In this pricing strategy, you consider the sentiments of your customers more than anything else. It requires you to extensively research your customers to understand their demographics, interests, and how much they are willing to pay for specific items. You use that information to price your products.
The market-based pricing strategy focuses on beating the prices of competitors, luring customers to your business. To implement this strategy, you need to scope out the product costs of your rivals. Once you know their prices, the trick is to set item costs in your store just below theirs.
In this pricing method, you price your products based on the cost of their production, manufacturing, and distribution. The formula is:
(Material cost + Labor cost + Overhead costs) x (1+Markup) = Product cost
Ensure that the markup price isn’t too high, especially for mass-produced goods such as canned beverages.
Price discrimination is a pricing strategy that offers products to customers at different prices based on various factors. Using this pricing method, you can price products on the maximum amount customers are willing to pay, order quantity, or customer demographics.
With the right pricing strategy, your business will witness higher website traffic and conversions. Manually managing the cost of various products using spreadsheet software and paper-based tools is a hectic task. The more convenient way to do it is with SmartPOS. It is the ultimate cloud-based POS software for managing product prices, inventory, sales, employees, customers, and more. Reach out to us to learn more about SmartPOS.