If you want to succeed in eCommerce, you must know how to price a product. As an online store owner, you must know the difference between the lowest and the highest prices. The highest prices don't necessarily mean that most of your customers will run away from you, resulting in low sales. Similarly, the lowest prices don’t mean that you will have high sales. The high prices may generate low sales but will reward you with huge profits.
If you want to balance both sides, you must have an effective pricing strategy. A pricing strategy is an important part of your online store. It is not just about putting a price tag next to an eCommerce product. You have to conduct a lot of research and analysis before finalizing your product price.
Strategies to Price Your Product
1. Discuss Pricing Ambitions
Before you go through this guide on how to price a product, you must ask yourself a few questions. What are your pricing objectives? What is the opinion of your team about the pricing tactics? How can you satisfy your customers with the prices you will put on your eCommerce products? Once you have the correct pricing strategy in place, you will be able to fulfill all your pricing objectives.
For example, if you have decided to promote a gaming controller of PlayStation 5, you would put a high price because the product has recently come to the market and is on every gamer’s lips. As a result, the early adopters will be able to pay that amount to get their hands on the exclusive product. On the other hand, if you choose to put a low price tag on that product, you will be able to build your market share.
2. Competitor Analysis
If you are struggling in pricing your product, it could be down to a few reasons. Firstly, your desired product could be known in the market, and you don’t know how much the customers will value it. Secondly, you are unaware of your competitors' prices on the same product. For this reason, you can conduct competitor analysis to have a better idea of when you price a product.
By doing competitor analysis, you will not just be able to understand the price of your eCommerce product but also other methodologies your competitors have been using in regards to their product. For example, they can be including different discounts and coupons as part of their online store. On other eCommerce websites on Strikingly, you may have seen the tag “Buy one and get one free” on other eCommerce products. You can implement the same strategies to sell your products efficiently.
3. Check Out Variable Costs
When you understand how to price your product, one of the first things you do is check out all the costs that help get every product out the door. When you order products, you must get your answer about the cost related to each unit, also referred to as the cost of products sold. If you are responsible for building your products, you must do further analysis and look at your raw materials, labor costs, and overhead costs.
When you try to price a product, you will have a few questions. What is the cost of that bundle? What is the number of products that you can create from it? Once you have the answer to these questions, you will have a rough estimate of the cost of products sold per item. However, you shouldn’t disregard the time invested in your online business. Simply, you can create an hourly rate of your business earnings and divide it by the number of products you make.
4. Add Profit Margin
After going through all the variable costs per item, the next step in your pursuit to price a product is to include the factor of profit. By including profit margin in your product pricing strategy, you will be able to make your business valuable. When choosing a certain percentage related to your profit margin, you must remember two important factors:
You haven’t mentioned your fixed costs yet, so you have work to do beyond your variable costs.
Make sure that you conduct market research and put a price tag that is acceptable within the market.
If you want to manage your eCommerce products efficiently, you won’t find better online website builders than Strikingly. Strikingly gives you the option to easily manage, hide, and reorder products. You can also help your customers to check out the shipping options so you can find it easy to handle your transactions. Furthermore, we also enable you to customize your checkout messages, which will help increase your online sales and promotion of your products.
5. Don’t Ignore Fixed Costs
As mentioned before, variable costs aren’t the only costs in your product pricing strategy. Fixed costs are also an essential part of your pricing plan. It is the cost your customer has to pay, no matter what. When you price a product, the fixed costs remain the same if you price 10 products of 1000 products.
Fixed costs are an important part of running your business and of your product sales as well. If you want to manage both variable and fixed costs, you must look at both of these costs in one picture. You must visualize the number of units you would sell of a particular eCommerce product to break even at your chosen price. By making these calculations, you will be able to create a balance between covering your fixed costs and finalizing a competitive price.
6. Understand Your Customers
When you decide to price a product, it is crucial to know whether your customers will be happy about the price you have in mind. For this reason, it is important if you conduct market research to understand the body language of your customers. You can conduct surveys with your existing customers by sending emails with promotional messages. You can add demographics to your messages to make them a source of attraction for your visitors.
If you don’t have the money to conduct market research, you can go with the pragmatic options. For example, you can look at your customers based on specific unique attributes i.e. budget-sensitive, convenience-centered, and those for whom status means a lot. By doing customer segmentation, you will be able to target your desired customers and price products accordingly.
7. Subscription-Level Pricing
Subscription-level pricing is an effective way to price a product. By going with this strategy, you must know that you will receive regular payments from your customer within a limited period. Getting a membership for a certain number of years will lead you to a discount. The more you engage with the company’s eCommerce products, the lower their price will be.
Image taken from Strikingly
By building a professional website on Strikingly, you will similarly receive the revenue regularly. However, if you introduce a membership plan, you must make your customers about the kind of content they will see as members.
Price Your Products on Strikingly
If you want to create an online store and implement your product pricing strategy, Strikingly is the best fit for you. Firstly, you have to complete the registration, so we can fetch the critical data related to your website. We would require your full name, password, and email address in the registration process. Once you complete the registration process, you will be eligible to price a product. If you want to price your eCommerce products here on the Strikingly website, you must follow these guidelines:
Image taken from Strikingly
After logging in, click on “Build my Store” to get things started.
When you come to the website template section, you can choose one template from our provided collection.
Personalize the website template you have chosen and click on “Add New Product”
You will be redirected to the product manager, where you can enter all the critical data related to the product i.e. product image, product description, product title, product type, etc.
Once you have entered all the information related to a product, you can save and publish the product in your online store.
To succeed in eCommerce, you don’t need to look any further than Strikingly. We enable you to build an online store with ideal looks and powerful features. By customizing your chosen mobile-friendly website template, you can start to price a product.
Image taken from Strikingly
Strikingly provides various features to help you with your online business. We provide an effective order management system so you can process customer orders easily. Moreover, we also provide you with numerous payment methods, so your customers find it easy to pay you to get their hands on the desired product. So without wasting time, build your online store on Strikingly today.