8 Pricing Mistakes Every Online Retailer Should Avoid
In today's world, there are more than 1 billion online shoppers, and that number is only projected to grow. With so many people buying online, it's always hard for an online retailer to know what pricing strategy suits their products the best. There is no sure-shot way to ascertain the most effective pricing strategy to attract customers. What will work for your specialty may not work for others.
One thing's for sure, though: you need to price competitively to attract customers. But how do you know what your competitors are charging? Follow this blog post as we break down the 8 pricing mistakes every online retailer should avoid!
8 Pricing Mistakes Every Online Retailer Should Avoid
1. Pricing your products too low
Usually, retail stores believe that the lower the prices, the more attractive the products can appear! But that's a myth. Keeping your purchase price too low may make your brand appear cheap and give the impression that they aren't of decent value. As a result, even though you might see an increase in sales at first, your customer base will decline over time, and your costs will be severely impacted. Rather than compromising too much of your profit margin in an attempt to increase sales, price your product lines based on the value they provide to your customers.
2. Not Updating Pricing Regularly
Things change overnight when it comes to demand and supply. Your market is most likely not at a standstill. New trends, potential buyers, consumer preferences, and competition all can change the landscape. Based on festivals, special occasions, and dips, it is necessary to update your pricing strategies regularly. Most businesses are afraid of the backlash that a price change will cause, so they delay it as long as possible. In reality, keeping customers up to date about price changes can be a part of providing good customer service.
3. Determining prices solely based on cost
The "wisdom of the crowd," or the collective judgment of a product's correct price, is frequently cited as the right price offering. But, it is a huge mistake only to consider competitive prices and your costs to price your products. Instead, take a step back and look at the big picture. You need to determine what purpose the product will serve the potential buyers, how your consumer base will benefit, and what function it will play in your business strategy. It's always a good idea to experiment with different product offerings, as each will significantly impact your marketing strategy.
4. Overcomplicating sales price Presentation
The golden rule of trade secrets is to keep things simple. After you've settled on a price, make sure there aren't any misunderstandings. For a business owner, $1115.00, $1115, and $1,115 would make no difference, but for customers, it does! Those prices fell significantly high when the additional decimal points and other punctuation were introduced to the pricing. This precaution must be taken not only about prices, but also concerning various scheme offers.
5. Not practicing customer segmentation.
If you offer a range of products or even a variance of a few primary products, you are supposed to attract a diverse group of customers, each with their own set of preferences. So break your customer base through customer segmentation to provide personalized experiences. Identify the demographics, their preferences, their purchase history, their affordability, the value that they position on a product, and the budget constraints of your customer base. For determining these facts and figures, you can take the help of web scraping - a method of extracting and processing large sets of data to strengthen your business strategies.
With this knowledge, you can begin to fine-tune your pricing strategy to appeal to a broader range of customers. This gives you complete control over how different groups interpret the value of what your business has to offer.
6. Not Trying Enough Price Points
One of the most common mistakes retailers make is not providing enough price points. However, when it comes to making a purchase, today's consumers are used to having a lot of options. For example, some customers may not be able to afford the bottle versions of shampoos, so they prefer shampoo sachet. On the other hand, some would not want to buy every day, thus prefer the bottle version. Therefore, customers should be able to choose among a variety of price points for different versions of your products.
Also, do not forget to provide customized offerings, shipping, and delivery options. For example: if you are selling women's outfits, make sure you focus on different colors, sizes, quality options, and variations separately. This enables them to customize their checkout process by providing a whole new level of engagement, making them feel more involved in the decision-making process.
7. Attempting to achieve the same profit margin across different product lines
Some financial strategies encourage a push for uniformity, with companies attempting to achieve equivalent profit margins across multiple product lines. But, you need to understand that different products have different markets, and different customers assign different values to them. Those products should, of course, be priced to represent that variability. Thus, don't get too caught up in the idea of oversimplifying the pricing strategy to maintain a consistent profit margin across all of your products.
8. Not using Price automation
Lastly, we have price automation! You can quickly eliminate the guesswork and focus on actual figures by using a variety of critical data points. Patterns from large data sets, such as competitor pricing and inventory, buying habits, product preferences, product demand, and many other factors affecting pricing, must all be taken into account. And it is for this reason that automated AI pricing solutions exist. They help you save a lot of time by reducing the amount of manual labor required to keep track of your competitors' prices. In addition, retailers will have more time to concentrate on other essential and time-consuming aspects of their business by entrusting everything to these data-based solutions.
The pressure to optimize prices is even more considerable in the ultra-competitive digital marketplace, given the ever-changing online marketplace. You have to be dynamic with your approaches. But, due to a lack of reliable data, companies end up failing miserably with the pricing strategies. Big companies like Amazon use big data and web scraping services to ensure they consider all aspects, including offering's value, customer base, preferences, and of course, the competitors, before pricing their products! Artificial intelligence for Price automation, i.e., analyzing publicly available data to gather info about the prevailing pricing strategies and customers, will surely come in handy in such situations.
By analyzing data to your benefit, you can optimize your profit margin and ensure that your customers will be willing to buy at that price. Differentiate your product and position it as a superior product using web scraping services. Whatever your product or service is, all you have to do is find a suitable web scraping service, and you can hand over the stress to the concerned team easily. The data scraping service from Datahut is precisely what you need. In addition, Datahut offers affordable data extraction services (DaaS). Contact Datahut to learn more.
Related Readings 1. How Web Scraping can Benefit Shopify Store owners