Pricing products and services on an eCommerce app are the most essential and complex thing that you will do as a business manager. Price is the most critical factor for the majority of customers worldwide. Indeed, 87% of Americans consider price as the most influential factor.
There are a number of ways to make a pricing structure for your online business, but there are a lot of pricing plans that will not help to generate revenue and may also damage the customer’s opinion for your brand.
Consumers have now freedom to shop from different places such as a website, app, or through social media. Moreover, they have an option to check the price on various comparison sites.
Therefore in an online marketplace, the price of a product can increase a user’s interest or make them exit from your app. So, you have to keep the proper pricing of your products.
In order to resolve your issue, here we will provide some modern and highly-effective pricing strategies that can be develop an eCommerce app or website.
Without waiting much, let’s get started:
8 Effective Online Pricing Strategies for Your E-Commerce app
1. Cost-Plus Pricing
In this strategy, the retailer places a mark-up on the wholesale price of the product that they have purchased. This is also referred to as Keystone pricing.
If you currently have low inventory, keep a considerable amount of shipping and handling charges, and store products that are rare, you might be able to offer a higher mark-up in price. This pricing method makes sure that you are applying a huge profit margin every time.
2. Set a Specific Price
If a customer’s buying decision depends on the logic, it is always good to keep a specific price for the product. For example, $127.75 is better as compared to $199 or $200.
Based on the research done by the University of Florida, consumers believe that stores make rounded prices falsely higher. Therefore, they are rare chances they will tap on the Call-to-Action (CTA) button.
Specific prices work effectively in categories such as tech. It’s not an emotional decision where the logic is like, “It looks good and I will purchase it instantly.”
People might also assume that you have kept this price by summing up the price of different parts. Lastly, keep a logic-based pricing strategy in different categories, such as technology, electronics, digital devices, tools, and so on.
3. Increase Singles and Decrease Doubles
Consider that you are a parent looking to purchase Xbox one for your kid. Here, the console is useless without any game. But, when you check the price of games, you observe that they are pricey, although one pointless without the other.
A highly powerful pricing strategy is to consider this fact, bundle two or more compatible products together, decrease the bundle price, and list out the savings. Consumers are more likely to buy a bundle if they get a high percentage of discount instead of buying the products individually and paying more.
You can prevent all the buyers who are not purchasing the bundle by slightly increasing the price of individual products. You should keep this strategy in spare and not as the main objective to increase your sales.
4. Target Return Pricing
This pricing method focuses on a specific goal for the return of investment. You can decide a price that provides the target rate of investment.
The target return is calculated based on the money invested on the product, including the profit that you want to see in the return, adjusted for the time value of money.
The major drawback of this strategy is that it doesn’t consider price flexibility and competitor pricing.
5. Value-based pricing
This pricing strategy allows you to keep the price of the product or service based on how much the target audience believes it’s worth.
Value-based pricing is the most complex eCommerce pricing strategy because it needs market research as well as customer analysis. Your business will have to find out the best customers, mentions their reasons for purchasing, discover the most essential features in a product, and determine how much important role price plays in the purchase.
Using this pricing strategy, you have to update the prices of the products regularly. Also, this strategy ensures you get more profit on individual products and in the entire business.
6. Show the difference in pricing
It is an absolutely great pricing strategy; however, if you want to make it more effective, then consider anchor pricing. This simply means that you highlight the difference between the two prices by presenting the higher one as the old one and take benefit of the buyer’s spending impulses to pick up the offer.
One modification of the above strategy is to keep a high-priced item beside the lower one, with the latter being the one you actually want to impel to users. Buyers will notice the price difference and consider that cheaper one as a great deal.
7. Competitor based pricing
In a competitor based pricing, you track what your competitors are charging for a specific product, and keep the product price the same as competitors. This reduces the gap between cost and profit.
This pricing strategy is effective when you sell the same products, just like your competitors and have no divergence. You can follow this strategy if you think that your competitor has done enough research or has some experience or has made its place in the online eCommerce market.
Unlikely, this pricing strategy can turn into a pricing competition and might your business down. For instance, you are selling a product at $199 on both your website an Amazon. However, you don’t get the expected results. You found a competitor selling product at $189, so you lower the product price to $179. By doing this, both of you have not only destroyed your margins but also made the selling of your product more difficult.
8. Flat Pricing
The pricing strategy is mostly observed in the dollar stores, where you see that the price of all the products is identical. If your inventory includes products with a little price difference, then this is definitely a great strategy to consider.
This will make simpler not only for consumers but also for the management, and it will help you to generate more revenue if you have kept the price slightly higher than the medium.
If you are not convenient to implement this method, then just try it out for a day or week as a promotion and then check out the results.
So, these were some of the effective strategies that as an eCommerce App Development Company you should consider while listing the price of products in your app.