For potential sales, the price of a product is the major factor. In this competitive digital world with thousands of merchants, customers have more pricing choices than ever. The right pricing strategy is vital for your eCommerce store. 

Choosing the right strategy is a difficult task, and it is not all about profit. It includes the ways your customers see your products. From a discount reseller to a high-end brand, it could be all in between. You will need to figure out what appeals to your customers and target market and pick the right strategy for your business. 

 

eCommerce Pricing Strategy

An eCommerce pricing strategy is a well-thought plan to price products in a unique way to increase your sales. Every business requires a different pricing strategy. 

Even if you are making a profit from your business, you need to reevaluate your pricing strategies and improve upon them. Let yourself have ample knowledge of the pricing strategies. 

Cost-based Pricing Strategy

One of the simplest strategies, the Cost-based strategy, also known as mark-up pricing or breakeven pricing, generates revenue by adding a fixed percentage margin to the cost of the product. Cost-based pricing is one of the most used strategies and is common in starters and entrepreneurs. 

For example, If a product costs $20 to be manufactured and you want to turn a 20% profit on it, you would simply add $4 making the final price $24.

Types of Cost-based Pricing Strategy

Cost-plus pricing and break-even pricing come under the umbrella term of the Cost-based strategy.

  • Cost-plus pricing refers to the fixed percentage margin for the production cost of one unit. 
  • Whereas, Break-even strategy is based on the sale of units in bulk to break the total cost. 

Pros and Cons

Let us have a look at the brighter and darker side of Cost-based strategy. 

Cost-based Pricing Strategy
Pros Cons
Stable pricing wins the trust of your customers. There is a possibility of messing up with the calculations, and you lose money on each sale.
It covers overheads and production costs. With the fixed prices and increase in the material cost, you can face loss. 
You can easily set up cost-plus tracking to check the performance.  An abrupt increase in the prices at your store will run off your customers.

Overall, it is a good strategy for starters and entrepreneurs. 

 

Tiered Pricing Strategy

A tiered pricing strategy is the adjustment of the product prices based on the quantity or users type. With the discounts and markup options in either percentage or fixed amounts, Tiered pricing maximizes your sales by providing pricing options and user types. 

For example, WooCommerce wholesale pricing enables you to implore your customer to buy a defined quantity of products. 

Features

From specifying the prices for different users and guests to adjusting types like increasing and decreasing the percentages, you can also enforce maximum and minimum buying quantity. With Tiered pricing, you have as many features as mentioned here. 

  • You can specify prices for guests and different users. You can set prices for wholesale, retailers, and bulk users.
  • With tiered pricing, you can adjust percentages and markups. You can also enforce maximum and minimum buying quantities.

Pros and Cons

Tiered Pricing Strategy
Pros Cons
Calculations and prices are straightforward. It makes sellers earn from a defined range of prices. It is not a user-friendly strategy. It limits the users. It displays pricing according to the user type. 
It offers extensive discounts as the quantity of the product increases.  Only good for the retailers and resellers. It does not facilitate other customers. 

A tiered pricing strategy is the best for those who want to sell in bulk. You can have many features with WooCommerce wholesale pricing. 

 

Bundle Pricing Strategy

Selling several relevant products in a package or a bundle is called bundle pricing strategy. It is a common strategy to sell different products at a lower price than the sum of individual prices. For instance, you can sell a laptop with its accessories on a certain percentage margin. 

Some sellers allow their customers to choose their own packages from a list of products. A lover of Harry Potter will love to buy all its book series at a lower price than buying individually at higher costs.

Pros and Cons

Let us have an idea of how bundle pricing will help you. It also has some drawbacks. 

Bundle Pricing Strategy
Pros Cons
Customers find the convenience and pleasure in getting a convincing bargain. Sellers end up creating the wrong bundles. It decreases the value of a certain product.
Bundle pricing increases revenue as it simplifies large-volume purchases and buying experience. Bundle pricing leads to product cannibalization. It reduces the individual value of the product. 

Fun fact: Customers perceive the value of the bundle as greater than the individual products. 

Dynamic Pricing Strategy

Dynamic pricing strategy refers to flexible pricing and constant change in the prices due to demand. Dynamic pricing is also known as Surge pricing. 

For example, applications like Uber and Careem use dynamic pricing when they see a rise in the customers that need a ride in bad weather or other such events. 

Pros and Cons 

Dynamic Pricing Strategy
Pros Cons
With dynamic pricing, you can decrease prices if sales fall below your target.  You can see a drastic reduction in the conversion rates if your prices are constantly changing.
You can increase the prices for more revenue if you see a spike in sales.  Your customers may get acquainted with your behavior. They may purchase only when you reduce the prices.
You can stay competitive in the market with flexible pricing.  Your customers may start distrusting you and your business philosophy. 

 

Final Words

Strategies are all here. You just need to evaluate your targets, rethink your philosophy and execute accordingly. Be patient, and believe in your strategies. Success is heading towards your threshold. 

Leave us a comment if you find this article informative and helpful. Good luck!