Current estimates put the number of active ecommerce websites at 12-24 million. Online selling is fiercely competitive. No matter what niche you may have, there are many other online shops that can compete with yours for your business. Consider setting the prices of your products and services competitively to position your store as the best choice for consumers.
How can you create a pricing strategy that is competitive?
When pricing products, business owners should look at how their competitors are pricing them. It is important to keep track of your competitors to determine what actions you should take. Moreover, if you want to win over customers, it can be very beneficial to focus on their pricing.
This technique can cause price drops between businesses if the products are too similar. Strategically, however, this is not necessary. The lowest price does not necessarily mean your product has a competitive advantage. You might consider adopting a competitive pricing strategy. Continue reading for some tips and steps to follow in order to implement a competitive pricing strategy.
1. Do your research on the competition, from broad to niche.
Research is the first step. You can quickly determine which companies and large stores will be interested in your product if you are selling fishing poles. You won’t have any direct competition if your product is more niche like luxury cat bowties with a family crest embazoned on them.
Remember that your customers have many options. As an example, you might look into businesses that sell regular cat bowties, cat costume, and cat collars. Even though the products may look completely different, you will be able to gain more insight into your customers’ choices and position your product as the best.
2. Compare your products to those of competitors.
Next, compare your products with those of your competitors. What are their similarities? Which are their main differences? What are their major differences? These characteristics will help you to answer the crucial question: How can you position your products to be “better” and charge more people for them?
3. Keep your eyes open to the bigger picture.
The product’s price list is not the end of an ecommerce experience. The overall experience that a customer receives is affected by shipping costs, return costs, delivery times, quality, and packaging. To get an idea of how much customers will pay for a similar experience, consider all the shipping costs that your competitors would charge.
How can you provide customers better value without compromising your bottom line?
It is easiest to offer a lower price and hope your customers will be more price conscious. You don’t have the right approach and it can negatively impact your bottom line. You can use the information you have gathered to create and communicate an experience that is unique among competitors. It’s worth it. These are some steps you can take in order to achieve this goal.
1. Highlight the advantages your product has over competitors.
Your products should be made of higher-quality materials, sustainable, and come with the necessary accessories. Make sure this information is prominently displayed on your website. This will make your product seem more worth the higher price, even if it is more expensive. Your brand will be able to outperform your competitors if they have a similar feature to yours, but don’t explicitly mention it.
2. Your overall experience should be superior to competitors.
Do you offer faster shipping Gift-worthy packaging? Courier delivery for locals? Specialized packaging to prevent breakage This will let your customers know what a great experience you offer. It’s a great place to highlight a competitive return policy. Some products cannot be fully evaluated without being tested by hand.
3. Take into account how shipping costs relate with product costs.
When diagnosing abandoned carts you will need to consider shipping costs. You’ll want to figure out how to lower or justify your shipping costs. Consider how much shipping costs are compared to the average product cost. If a product is popular and costs $25, customers won’t be willing to pay that much. These are some things you can do in order to avoid shipping-related objections at checkout.
Offer free shipping if you can and include shipping costs in your product price. Although this may sound like a way to lose money, 79% of US customers believe that offering free shipping will increase their willingness to shop online. This is due to Amazon’s rapid and free shipping. Customers may be willing to pay more for faster delivery. Others don’t care about when their order arrives. You can offer different shipping rates for different delivery times. If your products require fragile packaging, explain to your customers why. Refrigeration? A trip to another country? Sometimes context is all that is needed to convince people that extra care is worthwhile.
Last Thoughts
A competitive pricing strategy will ensure you lose fewer customers to your competition. Even if you charge more, customers will still be willing to shop with you. Although you might need to adjust shipping costs to attract more customers, the benefits of gaining repeat and referral customers will quickly offset those costs.
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By: Elisabeth Newell
Title: How to Price Ecommerce Products Competitively (Without Compromising Profits)
Sourced From: www.volusion.com/blog/how-to-price-ecommerce-products-competitively-without-compromising-profits/
Published Date: Wed, 04 May 2022 15:05:00 GMT
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