All your business must be based on strategies. If you own an e-commerce business or you want to start one right now, this article will help you set the strategy for fair pricing and staying competitive without making your customers abandon their carts.
The difference between price and value
The price represents the number shown on your website in order to inform your customers about how much the items cost.
On the other hand, the value is more than that. People tend to think of value as a small price, but value actually is the adjustment between the advantages the product offers to the customer and the price paid for it.
It depends on your unique selling proposition how you display the differences between price and value. The high-level brands already place value on top of pricing. First, they show all the advantages the product or service and after they planted the wish inside the customer’s mind, they display the price, making it harder to say no to.
This strategy doesn’t work for everybody, so you must pay attention on all the insights you have from your clients and run tests to make sure your prices are not too high or too low.
A capable company can help you set up your website and choose the best platform for your e-commerce business.
The incident of cost and margin
You can choose the classic way of setting the price: cost plus pricing. This is a simple version of deriving the selling price, no matter if you set it in a currency or in percentage.
This is a harmless way of selling safe because you are always aware of your margin and you prevent losing any money.
But the major disadvantage is not knowing if you can sell your products at a higher price. Not testing if your customers are willing to pay more will keep you on a floating line, but won’t make your business grow fast.
Competition is important
Your business is not alone on the market. So it is important to measure your prices based on your competitors. The concept is called market-oriented pricing, as it compares your prices with others available on the market.
In the end, if your prices are much higher than your competition, you risk yo lose your customers. And if you try and set thin margins, you risk your business. There must be a balance you can only obtain using data.
In the end, your strategy should start from your type of business and your unique selling proposition. But no matter what strategy you have, you need testing. If you are ready to start or have more questions about your e-commerce platform, we are here to help you.
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