Pricing Strategies to Get More Sales
When you launch your online store, how to price your products is an important consideration. You will want to research your competition to understand their market positioning and pricing and then decide how to position your products relative to your competition. Pricing must be set high enough to cover your costs and provide an acceptable profit margin, however it cannot exceed what the market will bear.
Is there anything an online merchant can do with pricing to help increase sales? Of course! There are numerous effective pricing strategies that savvy merchants employ to increase sales. Here are a few worth considering.
Loss Leader
This strategy seeks to attract shoppers to an online store where the merchant is offering deeply discounted pricing on a popular item (the Loss Leader). Once the shopper is in the store and engaged with the content, the merchant has numerous opportunities to promote other, higher-priced products to the shopper.
For example, if the Loss Leader is a flashlight, perhaps high margin batteries would be a good related offer. If the Loss Leader is a popular camera model, present the buyer with higher margin items related to the camera such as a memory card, spare batteries, a camera case, a tripod and the list goes on.
Bundle Pricing
Bundle pricing is where a merchant will offer reduced pricing for a predetermined bundle of products that would otherwise cost much more if purchased separately. This tactic stimulates the buyer to purchase more than originally intended in order to take advantage of the Bundle Pricing cost savings.
For example, if the merchant is selling cameras, the Bundle Pricing deal could also include a camera lens, a case and a memory card. Another example could target a desktop printer and the Bundle Pricing could include related products such as an extended warranty, spare toner and/or a case of paper. Of course, the cost savings of the offer must generate enough value for the buyer. It is unlikely that a buyer will increase their order by $100 in order to achieve a $2 savings.
Bundle pricing can be effective for selling off slow moving stock.
Version Pricing
Version Pricing is where a merchant will create multiple versions of a product in order to appeal to a broader segment of the market. This strategy is common practice in the photography market where merchants make available various camera models, each appealing to a different market segment. This may include an entry level model with less features and lower resolution, a more feature laden model targeted at the photography enthusiast and a high resolution, feature laden camera targeted at the semi-pro or professional market segment. Many products can be adapted to Version Pricing… can yours?
Volume Discounts
The Volume Discount pricing strategy is used to motivate buyers to increase the amount they purchase. Buy more and get a larger discount. Things are cheaper by the dozen! Using Volume Discount pricing allows consumers to save money by spending more. It’s a win for both the buyer and the merchant.
Volume Discount pricing is an effective strategy for selling off excess inventory.
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