Determining the price for products that are on offer in an online store would seem like a fairly simple task.
You just have to analyze the competition and fit into their price level.
However, the reality is slightly different. You have to honestly assess your own capabilities, costs, brand presence in the network, its recognition, strength, etc. Competitive analysis is an absolute basis, but it’s definitely worth pursuing your own pricing policy. Especially when competing with the price is not necessarily the best idea.
There is a wide range of possibilities when it comes to setting a price range. The e-store offers products generally available, sold by many online stores, ordered at wholesalers or distributors. There are also products ordered directly from manufacturers. Products are stored in their own warehouses or in external warehouses on the basis of fulfillment, and finally unique brands from foreign suppliers or producers are placed on the Polish market. Each situation requires a different pricing strategy. Each product has a different combination of the elements listed, which should affect the final amount that the e-consumer will pay.
What prices attract customers?
Just as there is no single way to set prices, there is no single type of price that would attract consumers. It is also important to note the analogy between methods and prices that attract customers. If there are x ways, then there are x types of prices. For centuries, sellers have been managing prices, trying various tricks, acting on the imagination of customers, tempting not only with discounts but also with cleverly managed prices.
Look at the prices that can attract and increase sales:
- prices that have charm (charm pricing) – this type of strategy comes down to the use of incomplete prices, which end at 9 or 99. Instead of the price of 30 PLN, it will be much more effective to use the price of 29 PLN, and similarly at higher values - instead of 150 PLN, the better option will be 149 PLN. Instead of 200 – 199 PLN, etc. What is interesting is that the customers are more willing to buy something even if we raise the price from 86 to 89 PLN. The first price seems high, it raises negative emotions, it does not cost less than 90, but more than 80,
- skimming pricing strategy – this is a way to increase sales in a short period of time. High prices apply to products that are unique and have just been launched. You can also apply this price to products that are the most wanted in a given segment. The use of such prices with premiere products or pre-release products will tempt customers aspiring to be always up to date, who feel the need to follow the latest trends and are willing to pay a higher amount, which may give the impression that you are getting something exclusive. It works for a short time, after which the market regulates prices and brings them to the right level,
- the left side counts – if the store’s offer is directed to a group of customers who pay particular attention to the price (low price), then pay attention to the left side of the price. What does it mean? In this case, instead of 30 PLN, we set the price at 29.99 PLN. Then the impression is created that the product is cheap. The method has been used for decades, but it still works,
- we throw away the ends – prestigious products cannot have a cheap-looking price. For such a group of products, the price should be simplified. It is not worth using any tips then, so every price should be rounded. This is especially important when the customer is waiting for a product that is just hitting the market. Consumers from this group want to stand out by having, for example, their newly released smartwatch. They want to be in an exclusive group,
- prices easy to remember – it’s better to avoid prices that look quite complicated. Simplicity, the price presented in the known outline is better, received more enthusiastically. Thus, the product amount of PLN 87.23 may have a negative effect, the offer may be rejected.
How to determine the price of a product?
It would be an abuse to say that it all comes down to establishing a strategy and pricing policy. However, one cannot ignore the fact that determining these elements of the e-store operation is crucial for success in online sales. What is the pricing strategy then? It is a way, an idea that allows to attract a customer from a given group by means of price. They should be tailored to the target groups of each online store. So start by identifying the target group or multiple groups.
To begin with, let’s answer the question – who is the perfect customer for an online store? Then, we define the target groups and develop the persona. With this information, we already know what kind of things the customers from those groups value the most. We will also learn how to reach them, which channels we need to use in order to run advertising campaigns. Without this information, it would be impossible to develop a pricing strategy. By getting to know our future customers exactly, we learn about their behavior, price sensitivity, whether it is the only thing that matters to them or whether they pay attention to other things.
Why is creating persona helpful in setting product prices?
After analyzing the marketing data, we already have considerable knowledge about target groups. Based on this data, you can already start developing a persona that will be a model e-consumer of an online store. Creating a persona, therefore, helps answer questions about who sells the product, which will be useful when determining prices. It is worth noting that the use of person is much wider, they help to develop entire marketing strategies or even support web design.
Persona is actually a character that we create based on our data. Although created, it has to present the features of a real man. Demographic data are necessary to develop persona – gender, age, place of residence, language he uses, marital status, whether he has children, what occupation he has, what education he has. You will also need psychographic data that helps determine your lifestyle or personality traits. Equally important are behavioral data, such as online behavior, the devices and technologies used, and what makes them brand loyal. All data is necessary to better understand the purchasing process in the context of the product or service offered. Having a person created on the basis of this data, determining the price will be simpler and above all more precise.
Online store price – does appearance matter?
The price in the online store is one of the basic elements that is verified by users. In addition to being marketable, calibrated to the target group, it should also be properly presented. From a technical point of view, the price should be clearly displayed on the product card. This means that it should be visible immediately after entering the site. This seems quite obvious, no one wants to get stuck on the site in search of price. This action can discourage and even raise distrust.
The price itself consists of other elements. Whether there is a promotion or the product can be bought with a discount code, all these elements should be in the block where the price is located. The presentation should be encouraging. Delicate graphic elements can make the price in the eyes of users seem more attractive, like a unique opportunity. Let the previous amount be crossed out in a suggestive way, and the one after the reduction should be clearly displayed in red, and next to it there should be information about how much this percentage is currently lower. These are known strategies that still work today.
The design of a price is very important. Hidden, invisible immediately after entering the product card creates shopping barriers. It is also worth noticing that the price is not only in the card. A slightly different phenomenon is the total price of shopping in the online store. Here, too, it plays a huge role. What does it mean? The final price also usually includes delivery costs. These should be clearly visible in the summary.
So how do you present the price in an online store:
- without hiding costs – the price of the product must match the description, which is obvious, but it also cannot hide additional costs, e.g. for transport or additional accessories,
- the price must always be current – the price must be modified depending on promotions or special offers,
- perfectly visible – one of the most important elements of the product card is the price. In this case, it must be visible, have the right size, it can also be distinguished by another, contrasting color,
Additional costs – together or separately?
The issue of finalizing the shopping basket from the very beginning of the existence of e-commerce was widely discussed. Especially at the initial stage of introducing online sales, attempts were made to develop a clear and fair shopping path for the consumer. The most sensitive topics concerned the number of things that e-customer must do to make a purchase and the question of the basket summary itself. The subject discussed ways to create the shortest and transparent shopping path with a summary of purchases that does not arouse any kind of suspicion. At a time when ecommerce practices were not categorized yet, these things were not so obvious.
Referring to the final price itself, it must provide a full list of additional costs that the client has to pay in order to complete the order. This means that in addition to product prices, the delivery cost must be included in the total amount. Only a decade ago, these costs were hidden. Which was naturally negatively received by e-consumers who were convinced that the amount in the basket was the final amount. It was only when the payment confirmation came that they realized that the alleged final price was increased by the cost of delivery.
Today, such practices have basically been eliminated. Both SaaS and open source platforms (e.g. PrestaShop platform) as well as individual solutions have designed shopping paths to simplify purchase and to be very transparent. Otherwise, we can be sure that the abandoned basket rate will be above average.
What deals should you take advantage of to increase the price in the online store – check out 3 options
Check whether you don’t have the lowest price
Carefully analyze the market in terms of the price you offer in your store and what kind of prices have your competitors. You may find that the products you offer have the lowest price on the market. In itself, it is not so bad, but if the difference is big then there is already a signal that prices can be modified without harming the number of customers. Even if your product costs a few zlotys less than your competitor’s, you can modify the price so that you will still stay with the lowest price, but you’ll gain a few zlotys on selling one product. This is an advantage for the e-store, which will create greater profit.
You have the product right away- no one else has it in stock
This is not a rare situation. It often happens that the same product offered by many online stores is not available immediately. Stores have it on offer, but you have to wait a few days for the order to be completed. If this product is in your store right away, it is an advantage. E-consumers do not want to wait, they want to have the parcel delivered quickly. Therefore, sometimes they are ready to pay a little more to have the product faster. Test the boundaries that customers will not cross to buy a slightly more expensive product that they will get quickly. Verify how much you can raise the price.
Sometimes a few pennies are enough
You may find that your online store’s competitors have prices just a few cents lower. In such cases it is worth spending such an amount to jump over competition in price rankings. This is not a big sacrifice, and the effects will be surprisingly positive. This way, customers will be more willing to use the store whose prices are even a few cents lower. And more customers equals more profit.
How to modify the price in the product file?
The product file is irreplaceable in managing the online store offer. The product feed contains all product information, including the image file URL and assigned categories. There is also room for prices in the feed. It is also a place not only for regular prices, but also the discount prices.
Price modification can be done in many ways. If we have to update many items, much simpler and faster way to do it would be from the file level. Instead of entering prices in the store’s CMS and “clicking” from one card to another, you can move from row to row in the price column and change prices quickly. Then, you can just import such a file to the e-store and the prices will update automatically.
If there is the number of such prices is really high and the change results from raising them, e.g. by 3%, it is worth using the appropriate Excel formulas. One formula will change all the items indicated in it.
It should also be noted that product files are not created from scratch. They are forwarded by distributors, wholesalers and manufacturers. Nowadays, it is a standard for managing the entire online store offer. Especially that the product feed also supports the coordination of all online campaigns that are carried out in channels such as Google Ads, Facebook Ads, affiliate networks, marketplace`s and price comparison websites. Without an XML file, running campaigns in these spaces is virtually impossible.
Prices in online stores are a crucial point that must be under constant monitoring. It is the prices that most often decide whether an e-customer decides to buy something. This is usually the first thing that is verified by users. It is not surprising that everyone who cares about profit ecommerce constantly analyzes the market situation in terms of prices and how they position themselves among the competition. Regardless of the pricing policy, it is worth managing these prices properly. To this end, we use primarily a product file that is secure, allows quick changes and helps with integration in many sales channels. It also allows you to optimize your online campaigns and react quickly when the ads do not produce the expected results.