Markets are versatile, there’s no denying that. And every retailer operates in ways specific to them and their market.
As far as pricing goes, finding the right strategy is crucial to your business’s success. Especially in today’s ecommerce space, which is becoming increasingly competitive.
So, which retail pricing strategies are right for you? In this article, we explore the most popular strategies to help you attract more customers and grow your business.
What is retail pricing strategy?
What we mean by retail price is the final amount customers pay for a product or service. If you want your business to make a profit, you must set a retail price that takes into account the cost of the goods themselves, plus your additional markup.
The good news is that ecommerce allows you to explore various retail pricing strategies; however, the ones you choose will ultimately depend on your company’s short- and long-term business goals.
Examples of online retail pricing strategies
A few popular retail pricing strategies for you to try out on your online products include:
- High-low retail pricing strategy – this introduces products at a set price, reduces that price during special events (holidays, sales, etc.) then raises it again afterwards
- Economy pricing – this involves bulk-buying items and selling them at the lowest possible price, doing so again and again for a steady stream of revenue
- Penetration – newer companies love this one, which involves setting a lower price than competitors to quickly gain market share
- BOGOF – ‘Buy one get one free!’ has been popular for ages, but it usually only applies to selected items
- Captive pricing – encouraging customers to make one-time purchases on products that then need accessories to function, e.g. razors and blades, printers and ink cartridges, etc.
Tips for successful retail pricing strategies
Your retail pricing strategy must be well thought out if you want to succeed in the crowded online marketplace.
A few ways to get your retail pricing right include:
1) Track competitor prices
Keep an eye on competitors who dominate your market and see if there’s a way you can follow suit. Then you’ll soon be able to establish yourself as a major player in the ecommerce space.
2) Stay alert to any changes
Reacting to price changes is a key requirement for retailers if they want to stay competitive. But doing so quickly, correctly and on a regular basis isn’t easy. Luckily, Magpie DBX lets you access price changes daily, so you’re always ahead of the game.
3) Consider MAP pricing
MAP pricing helps boost your profits, safeguard your products from counterfeiters, and promote your brand to a wider audience. If you don’t currently have a MAP policy in place, we highly recommend one to stop stock from being undersold across the digital shelf.
4) Know your market and products
Every product you sell is unique, whether it’s tiny hardware or the most sought-after games consoles. As such, understanding how to value each item is an important skill, and your pricing should reflect that.
Tempting though it may be, do not try pricing a product for less than it’s worth. Customers will see through this trick and avoid your brand out of suspicion.
5) Price capture isn’t everything!
Yes, price is important, but other factors may influence customers into buying elsewhere. Monitor stock and shipping so you can give the best delivery times, and remember other value impactors, too, such as extended warranties, gift cards, cashback, inclusive delivery – the list goes on!
How can retailers improve their pricing strategy with Magpie DBX?
Magpie collects over a million price points each day, so we’re uniquely positioned to help with your retail pricing strategies. Our infrastructure, architecture, and scalability means no number of prices is too little for us!
Want to find out how Magpie can help improve your brand’s retail pricing strategies? Get in touch with us and request a demo today!