[vc_row][vc_column width=”1/1″][vc_column_text]In the competitive world of ecommerce, finding effective pricing strategies is crucial for retail storeowners to thrive. One such strategy that has proven successful for many businesses is price skimming. This article aims to provide ecommerce storeowners with a comprehensive understanding of price skimming, its definition, and examples of its implementation in the retail sector.
What is Price Skimming?
Price skimming is a pricing strategy wherein a business sets an initially high price for a product or service and gradually lowers it over time. This approach targets early adopters and price-insensitive consumers who are willing to pay a premium for the novelty, exclusivity, or unique features of a product. As the demand from this segment diminishes, the price is progressively reduced to attract more price-sensitive customers.
Advantages of using Price Skimming in Ecommerce
Capitalize on Early Adopters
Price skimming allows ecommerce businesses to maximize profits by capitalizing on the willingness of early adopters to pay a premium for new or innovative products. These customers are typically less price-sensitive and are eager to be the first to experience a unique offering.
Enhance Perceived Value
By initially setting a higher price, businesses can create a perception of exclusivity and premium quality among consumers. This can result in an increased perceived value of the product, further enticing customers to make a purchase.
Recover Research and Development Costs
Price skimming can be especially beneficial for ecommerce businesses that invest heavily in research and development. By setting higher prices initially, these companies can recoup their R&D costs more quickly before competitors enter the market.
Disadvantages
While price skimming can be beneficial, there are a few drawbacks to consider:
Limited market reach
High initial prices may deter price-sensitive customers, limiting market penetration and potentially slowing revenue growth.
Competitive response
Competitors may enter the market with lower-priced alternatives, intensifying competition and eroding the initial advantage of higher pricing.
Perception of overpricing
Setting high prices may lead to a perception of overpricing if the perceived value doesn’t match the premium price, potentially damaging the brand’s reputation.
Potential for price erosion
Lowering prices over time to attract price-sensitive customers can erode profit margins if not carefully managed.
Timing and competitors
Success depends on well-timed product launches, as competitors introducing similar products too soon can diminish the strategy’s effectiveness.[/vc_column_text][vc_column_text]
Examples of Price Skimming
Apple Inc.
Apple is renowned for implementing price skimming with product launches. When introducing a new iPhone or other Apple devices, they set the initial prices at a premium level. This strategy enables Apple to generate substantial profits from early adopters before eventually reducing prices to target broader customer segments.[/vc_column_text][us_separator][us_image_slider ids=”8590,8591″ meta=”1″ css=”%7B%22default%22%3A%7B%22background-color%22%3A%22_content_secondary%22%7D%7D”][us_separator][vc_column_text]
Luxury Fashion Brands
Various luxury fashion brands utilize price skimming to maintain their exclusive appeal. They set high prices for new collections or limited-edition items, attracting wealthy customers who value prestige and uniqueness. As demand wanes, prices are gradually lowered to attract a wider customer base.[/vc_column_text][us_separator][us_image image=”8606″][us_separator][vc_column_text]
Gaming Consoles
Electronic gaming consoles like the PlayStation and Xbox often adopt a price-skimming strategy. Upon release, these consoles are priced higher due to the anticipation and demand from dedicated gamers. Over time, the prices gradually decrease, making the consoles accessible to a broader audience.[/vc_column_text][us_separator][us_image image=”8607″][us_separator][vc_column_text]
Software Subscriptions
Ecommerce platforms offering software subscriptions often employ price skimming techniques. They initially launch their products with higher pricing tiers targeting businesses or power users who are willing to pay more for advanced features. Over time, lower-priced options are introduced to cater to a wider range of customers.[/vc_column_text][us_separator][us_image image=”8595″][us_separator][vc_column_text]
How to Implement Price Skimming in Ecommerce
To effectively implement the pricing strategy in your ecommerce business, consider the following steps:[/vc_column_text][us_separator][info_list font_size_icon=”24″ eg_br_width=”3″ connector_color=”#8224e3″ connector_animation=”fadeInUp”][info_list_item list_title=”1. Understand Your Target Market” icon_type=”custom” icon_img=”id^5021|url^https://soft-surge.com/wp-content/uploads/2021/09/analytics.png|caption^null|alt^market research|title^market research|description^null”]Identify the segment of consumers who are more likely to be early adopters and are willing to pay a premium for unique or innovative products.[/info_list_item][info_list_item list_title=”2. Set an Initial High Price” icon_type=”custom” icon_img=”id^8603|url^https://soft-surge.com/wp-content/uploads/2023/05/price-tag-1.png|caption^null|alt^null|title^price-tag (1)|description^null”]Determine the optimal initial price based on market research, competitive analysis, and the value proposition of your product. Ensure the price reflects the exclusivity and perceived value you aim to convey.[/info_list_item][info_list_item list_title=”3. Leverage Marketing and Promotion” icon_type=”custom” icon_img=”id^4461|url^https://soft-surge.com/wp-content/uploads/2021/05/channel.png|caption^null|alt^Price monitoring marketing|title^Price monitoring marketing|description^null”]Craft compelling marketing campaigns to communicate your product’s unique features, benefits, and exclusivity to early adopters. Utilize social media, email marketing, and influencer collaborations to create buzz and build anticipation.[/info_list_item][info_list_item list_title=”4. Gradually Lower Prices” icon_type=”custom” icon_img=”id^8089|url^https://soft-surge.com/wp-content/uploads/2023/01/better-price.png|caption^null|alt^Competitive price comparison|title^better-price|description^null”]Monitor market response and gradually reduce prices to attract price-sensitive consumers. Analyze customer behavior and adjust the pricing strategy accordingly.[/info_list_item][/info_list][us_separator][vc_column_text]
Conclusion
Price skimming is a valuable pricing strategy for ecommerce store owners looking to maximize profits, capitalize on early adopters, and create a perception of exclusivity for their products. Price skimming has its drawbacks, including limited market reach, competitive responses, perception issues, potential price erosion, and timing challenges. By considering these factors and adapting pricing strategies accordingly, ecommerce businesses can leverage price skimming effectively to maximize profits and gain a competitive edge.
By understanding the principles of price skimming and learning from successful examples in the retail sector, ecommerce businesses can effectively implement this strategy to unlock their profit potential and gain a competitive edge in the market.[/vc_column_text][us_separator][us_cta title=”Want to take control of your price points?” title_size=”25 px” controls=”bottom” btn_label=”Learn More” btn_link=”url:https%3A%2F%2Fsoft-surge.com%2Fservices%2Fprice-monitoring%2F|title:Learn%20More|target:_blank” btn_style=”4″ second_button=”1″ btn2_label=”Contact us” btn2_link=”url:mailto%3Ainfo%40soft-surge.com|title:Contact%20us|target:_blank” btn2_style=”4″ css=”%7B%22default%22%3A%7B%22color%22%3A%22_content_bg%22%7D%7D”]With the power of Price Monitoring, you can find, receive, and analyze pricing data with the click of a few buttons.[/us_cta][/vc_column][/vc_row]
Odd-even pricing, also known as psychological pricing, is a marketing strategy where prices are set just below a whole number, such as $9.99 instead of $10.00. The practice is widespread, and it’s not unusual to see it in retail stores, restaurants, and online marketplaces (Amazon, Ebay, etc.). The main idea behind odd-even pricing is to appeal to the subconscious of consumers, giving them the impression that the price is lower than it actually is. In this article, we’ll explore the effectiveness of odd-even pricing, its psychological underpinnings, and the ethical considerations surrounding it.
Examples of Odd-Even Pricing
Odd-even pricing is ubiquitous in retail, and we encounter it daily in various forms. For instance, a shirt priced at $29.99 instead of $30.00 or a meal at a restaurant priced at $14.95 instead of $15.00. The strategy is based on the assumption that consumers tend to focus more on the first digit of a price than the second. This means that a price that ends in a lower number, such as 9, is perceived to be more attractive and cheaper than a price that ends in a higher number, such as 0.[/vc_column_text][us_image image=”8530″ size=”full” onclick=”custom_link” link=”url:https%3A%2F%2Fwww.pexels.com%2Fphoto%2Ffresh-assorted-colorful-bell-peppers-and-herbs-in-fridge-on-supermarket-7129155%2F|target:_blank|rel:nofollow” css=”%7B%22default%22%3A%7B%22padding-top%22%3A%226%25%22%2C%22padding-bottom%22%3A%226%25%22%7D%7D”][vc_column_text]
Psychological Reasons for the Effectiveness of Odd-Even Pricing
Odd-even pricing works because it taps into human psychology. Our brains tend to process information and numbers more efficiently when they are presented in a familiar and expected format. In the case of pricing, we’re used to seeing prices that end in 9 or 99, and so when we encounter a price that ends in a round number, our brain automatically processes it as being higher. Furthermore, odd-even pricing creates the illusion of a bargain. Consumers tend to view a product priced at $9.99 as being closer to $9.00 than $10.00, even though the difference in price point is negligible.
The Ethics of Psychological Pricing
Debates around the ethics of odd-even pricing have been ongoing for years. Critics argue that it’s a manipulative tactic that plays on people’s psychological biases. The use of odd-even pricing can be seen as a deliberate attempt to deceive consumers, making them believe they are getting a better deal than they actually are. On the other hand, proponents argue that odd-even pricing is a standard business practice that simply and fairly makes products stand out to consumers more. Ultimately, the ethics of odd-even pricing come down to how the tactic is used. If companies are transparent about their pricing practices and don’t manipulate consumers, then odd-even pricing can be ethical.
Other pricing strategies
While odd-even pricing is a widely used tactic, it’s not the only pricing strategy available to businesses. Alternative pricing strategies include even pricing, where prices are rounded up to the nearest dollar, and tiered pricing, where prices are based on different levels of product quality or service. Businesses may also opt for dynamic pricing, where prices are adjusted in real-time based on supply and demand. Each pricing strategy has its advantages and disadvantages, and businesses should choose a strategy that aligns with their overall marketing goals and customer base.
Odd-even pricing is a pervasive pricing strategy that has been used for decades in retail and other industries. The tactic works by exploiting human psychology and creating the impression of a bargain. While debates around the ethics of odd-even pricing continue, it remains a common business practice. However, businesses should be transparent about their pricing practices and avoid manipulating consumers. Ultimately, the most effective pricing strategy will depend on the business’s overall marketing goals, customer base, and market conditions.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][us_cta title=”Want to take control of your price points?” title_size=”25 px” controls=”bottom” btn_label=”Learn More” btn_link=”url:https%3A%2F%2Fsoft-surge.com%2Fservices%2Fprice-monitoring%2F|title:Learn%20More|target:_blank” btn_style=”4″ second_button=”1″ btn2_label=”Contact us” btn2_link=”url:mailto%3Ainfo%40soft-surge.com|title:Contact%20us|target:_blank” btn2_style=”4″ css=”%7B%22default%22%3A%7B%22color%22%3A%22_content_bg%22%7D%7D”]With the power of Price Monitoring, you can find, receive, and analyze pricing data with the click of a few buttons.[/us_cta][/vc_column][/vc_row]
[vc_row][vc_column width=”1/1″][vc_column_text]Competitor price monitoring/tracking software has become an essential tool for businesses to stay ahead in their markets and maintain their competitiveness. With the rise of e-commerce, it has become easier for consumers to compare prices and find the best deals. As a result, businesses must constantly monitor their competitor’s prices to remain competitive and maintain their margins. In this article, we will be discussing the top competitor price monitoring/tracking software that we are aware of so far in 2023.
DataSearch offers a comprehensive solution for e-commerce and retail businesses to track their competitor’s products and prices to make better-informed pricing decisions. This tool provides reports with price updates, product matching and comparisons, and market analysis in easy-to-read and useable formats.
DataSearch also provides data collection and aggregation for needs other than e-commerce price monitoring. Other uses have included gas price data acquisition, unified listing platform creation (such as Estate Searcher), and smart marketplace creation.
Prisync is another price monitoring tool, they are ideal for integrating with major e-commerce platforms such as Shopify, Magento, and Google Shopping.
Keepa is a browser extension that provides price tracking and alerts for Amazon products. This is an excellent tool for businesses that sell on Amazon and want to monitor the prices of their competitor’s products and even reprice their own.
Competera offers a broad range of solutions related to price monitoring, automated repricing, and pricing optimization. They have packages explicitly catered to businesses in various markets, such as Apparel & Footwear, Automotive Supplies, Grocery & Consumables, Health & Wellness, and more.
PriceSpider offers a brand monitoring solution to e-commerce brands that want to monitor the online presence of their brand and their competitor brands. This tool tracks prices and performs data acquisition on product descriptions, stock levels, keywords, and search presence.
This is a cloud-based software that provides real-time price tracking and competitor analysis. Price2Spy integrates with major e-commerce platforms such as Shopify, Magento, and WooCommerce, making it easy for businesses to track their competitors’ prices.
Octoparse is a leader in data collection as a whole, specializing in web scraping and crawling across industries. Their solutions range from scraping data across social media, news & content, higher education, automobile, and retail.
Klue is a platform that automates the collection of competitive and market intelligence. They also offer to streamline business analysis and distribution of insights by messaging team members within the business.
Repricer is a dynamic repricing tool that collects and compares Amazon product price changes and then uses AI to reprice your Amazon listings accordingly.
Conclusion
In conclusion, competitor price monitoring/tracking tools have become a crucial asset for businesses to remain competitive in the market. The top competitor price tracking and monitoring software in 2023 provide businesses with the tools they need to stay ahead of the competition and maintain their margins. Across the various tools on the market, some variations include integration methods (Shopify, Magento, Amazon) and the main source of the data you want to collect (e-shops, websites, social media). By using the software solutions that fit your business best, you can make informed decisions and remain competitive.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][us_cta title=”Want to take control of your price points?” title_size=”25 px” controls=”bottom” btn_label=”Learn More” btn_link=”url:https%3A%2F%2Fsoft-surge.com%2Fservices%2Fprice-monitoring%2F|title:Learn%20More|target:_blank” btn_style=”4″ second_button=”1″ btn2_label=”Contact us” btn2_link=”url:mailto%3Ainfo%40soft-surge.com|title:Contact%20us|target:_blank” btn2_style=”4″ css=”%7B%22default%22%3A%7B%22color%22%3A%22_content_bg%22%7D%7D”]With the power of Price Monitoring, you can find, receive, and analyze pricing data with the click of a few buttons.[/us_cta][/vc_column][/vc_row]
[vc_row][vc_column width=”1/1″][vc_column_text]If you’re a retailer, it’s essential to understand the concept of MSRP or the Manufacturer’s Suggested Retail Price. MSRP is the price that the manufacturer recommends you charge for a particular product. In this article, we’ll take a closer look at what MSRP is, how it affects your business, and how you can use it to your advantage.
What is MSRP?
MSRP stands for Manufacturer’s Suggested Retail Price. It’s the price that the manufacturer recommends you charge for a new product. The MSRP is usually printed on the product’s packaging and is the starting point for negotiations between you and your customers.
Should you use the MSRP?
Calculating your retail price points is important because it affects your profit margins. The retail price suggested by your manufacturer is only a guideline, and it’s ultimately your choice to decide a selling price. If you sell a product at or above the MSRP, you’ll generally make a higher profit than if you sell the product below the MSRP. However, selling a product above the MSRP can make it more challenging to compete with other retailers that are offering the same product for a lower price.
Another important term to understand as a retailer is “wholesale price.” This is the price that you pay the manufacturer for the product. The wholesale price is usually lower than the MSRP, and you’ll need to negotiate with the manufacturer to get the best price possible. However, it’s important to remember that you need to make a profit on the sale, so you may not be able to sell the product for the wholesale price.
Your wholesale price is the original price at which you buy the product or materials from the manufacturer or supplier.
How can you use MSRP to your advantage?
Discounts and Promotions
One way to use MSRP to your advantage is to offer discounts and promotions based on the MSRP. For example, you could offer a discount of 10% off the selling price for a particular product or offer a free gift with purchase for customers who purchase a product at or above the MSRP.
Pricing transparency with your customers
Another way to use MSRP to your advantage is to educate your customers about what it means. By explaining the concept of MSRP to your customers, you can help them understand that the price you’re offering is fair and reasonable (where your competitors may have worse deals). To get updated reports on what price points your competitors are using to sell the same products you, you can use price monitoring tools such as DataSearch. You can also use MSRP as a selling point by highlighting the features and benefits of the product at that price point.
Conclusion
In short, MSRP is an important concept for retailers to understand and use to their advantage. It affects your profit margins and can be used to your advantage by offering discounts and promotions based on the manufacturer’s suggested retail price. By educating your customers about what MSRP means and using it as a selling point, you can build trust with your customers and increase your sales. Remember to negotiate with the manufacturer to get the best price possible, but don’t forget to profit from the sale.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][us_cta title=”Want to take control of your price points?” title_size=”25 px” controls=”bottom” btn_label=”Learn More” btn_link=”url:https%3A%2F%2Fsoft-surge.com%2Fservices%2Fprice-monitoring%2F|title:Learn%20More|target:_blank” btn_style=”4″ second_button=”1″ btn2_label=”Contact us” btn2_link=”url:mailto%3Ainfo%40soft-surge.com|title:Contact%20us|target:_blank” btn2_style=”4″ css=”%7B%22default%22%3A%7B%22color%22%3A%22_content_bg%22%7D%7D”]With the power of Price Monitoring, you can find, receive, and analyze pricing data with the click of a few buttons.[/us_cta][/vc_column][/vc_row]
Price discrimination involves charging different prices for the same product or service based on certain factors, such as the customer’s location, time of purchase, or buying history. Businesses use price monitoring and dynamic repricing software to implement price discrimination strategies in order to increase profits by charging customers different prices based on their willingness to pay.
One example of price discrimination is dynamic pricing, which is often used in the airline and hotel industries. Airlines and hotels use dynamic pricing to charge different prices for the same seat or room based on the time of booking and the number of seats or rooms available.
For example, a hotel room may cost $100 per night if booked in advance, but $150 per night if booked the day of. Businesses can use smart repricing software to adjust prices in real time based on market demand, competition, and other factors. This can help them optimize costs and increase revenue.[/us_iconbox][us_separator size=”small”][us_iconbox icon=”fas|location-arrow” alignment=”left”]
Geographic Pricing
Another example of price discrimination is geographic pricing, commonly used in the retail industry. Retailers may charge different prices for the same product based on the customer’s location. For example, a product may cost $10 in one city but $12 in another city. This is done to account for the cost of doing business in different regions and to ensure that prices are competitive in each market. Companies can use price monitoring software to track prices in different locations and adjust their prices accordingly.[/us_iconbox][us_separator size=”small”][us_iconbox icon=”fas|users-crown” alignment=”left”]
Personal Pricing
A third example of price discrimination is personal pricing, which online retailers use. Personal pricing is based on a customer’s browsing and purchasing history. Online retailers may use individual pricing to offer personalized deals and discounts to customers based on their previous purchases. For example, an online retailer may offer a discount on a product to a customer who has previously bought a related product. Businesses may use dynamic repricing software to adjust prices for specific customers based on their buying history and other factors.[/us_iconbox][us_separator size=”small”][us_iconbox icon=”fas|percent” alignment=”left”]
Bulk discounts
Moreover, businesses use bulk discounts to offer discounts to customers who buy in large quantities. They can use smart repricing software to monitor and adjust prices for customers who buy in bulk and offer them discounts.[/us_iconbox][us_separator][vc_column_text]
Benefits and Downsides of Using Price Discrimination
Price discrimination benefits both the company and the customer. For the company, it increases profits by charging customers different prices based on their willingness to pay. For the customer, it results in lower prices if they are willing to buy in bulk or if they are able to take advantage of discounts and deals.
However, price discrimination can lead to confusion and frustration among customers who may feel they are paying more than others for the same product or service. It can also lead to price discrimination against certain groups of customers, such as those who are less able to negotiate or those who are not aware of discounts and deals. Therefore, it is important to be mindful of the potential drawbacks and take steps to ensure that it does not lead to discrimination against certain groups of customers.
Summary
In conclusion, price discrimination is a practice that companies in various industries commonly use to increase profits by charging customers different prices based on certain factors. Businesses can use price monitoring and dynamic repricing software to partake in price discrimination strategies, such as dynamic pricing, geographic pricing, personal pricing, and bulk discounts. While price discrimination can benefit both the company and the customer, it is important to be aware of the potential drawbacks and take steps to ensure that it does not discriminate against certain groups of customers unethically.[/vc_column_text][us_separator][us_cta title=”Want to take control of your price points?” title_size=”25 px” controls=”bottom” btn_label=”Contact us” btn_link=”url:mailto%3Ainfo%40soft-surge.com|title:Contact%20us|target:_blank” btn_style=”4″ css=”%7B%22default%22%3A%7B%22color%22%3A%22_content_bg%22%7D%7D”]With the power of DataSearch, you can find, receive, and analyze pricing data with the click of a few buttons.[/us_cta][/vc_column][/vc_row]
Competitive pricing is a pricing strategy used mainly by retailers to stand out amongst their competitors. The strategy entails determining and refining price points by monitoring and reacting to market competitors’ prices. Businesses in retail and e-commerce use competitive pricing strategies to attract price-conscious customers who compare retail prices with competitors who sell similar products/services.
Identify your competition and their public pricing data. Most large-scale retailers post their products with descriptions and prices on their websites.[/info_list_item][info_list_item icon_type=”custom” icon_img=”id^5023|url^https://soft-surge.com/wp-content/uploads/2021/09/seo.png|caption^null|alt^Web scraping SEO|title^Web scraping SEO|description^null” animation=”swing”]
2. Price Monitoring
Once you have collected competitor names, websites, and product names, you can then use monitoring software, such as DataSearch, to monitor their prices over time. Using efficient competitor price monitoring software, you can see how product prices change over time and across competitors.[/info_list_item][info_list_item icon_type=”custom” icon_img=”id^8089|url^https://soft-surge.com/wp-content/uploads/2023/01/better-price.png|caption^null|alt^Competitive price comparison|title^better-price|description^null” animation=”swing”]
3. Price Comparison & Matching
The next step is to match and compare the products and their prices. Price-matching software uses an algorithm to automatically match the same products from different retailers and display all of their prices to you. Then, you can observe where your brand places in the line of competition.[/info_list_item][info_list_item icon_type=”custom” icon_img=”id^5305|url^https://soft-surge.com/wp-content/uploads/2022/04/repricing.png|caption^null|alt^repricing|title^repricing|description^null” animation=”swing”]
4. Price Change
Lower prices
Setting prices lower than your competitors on direct product competition attracts customers who actively look and compare for the best deals they can find.
Higher prices
Setting prices slightly higher than competitors can make your brand stand out as the more prestigious option. For example, a “premium” package that adds extra features and accessories to a base product can attract more customers looking to make a transaction with added benefits. The perceived value of your products is molded by suitable marketing strategies, brand representation, reputation, and more than just your prices.
Matched prices
When retailers keep their prices to the same points as their competitors, they can play with psychological pricing strategies such as using €18.99 when their competitor sells the same product for €19. These types of strategies focus on how a price is presented and perceived by clients rather than the price itself.[/info_list_item][/info_list][vc_column_text]
More advanced Competitive Pricing Strategies:
Over the years, retailers have gotten creative with how they stand out from their competitors with their pricing. The following three strategies are some of the simple but proven strategies that play to the human psychology of a buyer and create attractive deals to attract more sales.
Penetration pricing
Entering the market with low prices and then increasing them once you have a more dedicated client base
Promotional pricing
Increasing urgency to purchase a product by launching a sales campaign of temporarily lowering the price[/vc_column_text][us_separator][us_image image=”8085″ align=”center”][us_separator][vc_column_text]
Captive pricing
Selling side products, accessories, or extra features separate from the main product and clients buy both/all to get the full value of the main product
Suppose you sell the iPhone 14 in your online shop in Europe. The price monitoring system will collect data from other regional businesses selling iPhone 14s and compare their resale prices side-by-side. Then, you can see if your prices are higher, lower, or the same as your direct competitors and make any changes accordingly. Furthermore, the system collects the iPhone 14 pricing data daily and tracks how they change over time. As a retailer, you can use the monitoring software data to consistently make your iPhones the cheapest in the highly competitive smartphone market, attracting more demand and profit.
Benefits of using Competitive Pricing Strategies
Potential benefits of implementing a competitive pricing strategy include the following:
Quickly react to competitor behavior
Dominate more market shares than your competition
Perform well-researched discount campaigns
Attract new customers and increase traffic with stand-out deals designed to outrun your competitors
Increase retention rates
Discover new products and competitors in your market
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What types of businesses can benefit from using Competitive Pricing?
[/vc_column_text][us_separator size=”small”][info_list font_size_icon=”24″ eg_br_width=”1″][info_list_item list_title=”E-commerce retailers” icon_type=”custom” icon_img=”id^4419|url^https://soft-surge.com/wp-content/uploads/2021/05/order.png|caption^null|alt^E-commerce checkout|title^E-commerce checkout|description^null” animation=”swing”]With online retail making up a massive part of the internet, a Google search for a product usually brings back countless listing results from different websites. The best way for you to stand out is by having the most up-to-date prices and marketing strategies in the sea of e-commerce.[/info_list_item][info_list_item list_title=”Dropshipping businesses” icon_type=”custom” icon_img=”id^8101|url^https://soft-surge.com/wp-content/uploads/2023/01/shipping.png|caption^null|alt^null|title^shipping|description^null” animation=”swing”]In the dropshipping industry, marketing is the key to success. Keep yourself updated on the prices of the goods you are marketing from sellers and their competitors.[/info_list_item][info_list_item list_title=”Manufacturers” icon_type=”custom” icon_img=”id^5336|url^https://soft-surge.com/wp-content/uploads/2022/05/power-plant.png|caption^null|alt^manufacturer|title^null|description^null”]Purchasing raw materials for mass production is a unique experience because a small price change can significantly affect total expenses. Having price change alert notifications on essential goods enables you to take timely action and avoid unwanted extra fees and confusion.[/info_list_item][/info_list][us_separator size=”small”][vc_column_text]
Automate your Competitive Pricing Strategy
Use our Competitor Price Monitoring Solution to quickly and efficiently keep track of competitors’ price points. Our sub-brand, DataSearch, is designed to find, gather, and structure your competitors’ prices so you can compare them with your own and make data-driven decisions.[/vc_column_text][/vc_column][/vc_row]
A price point is a specific point on a spectrum of possible prices for a product or service. The difference between the terms price and price point is that price refers to a specific price rate, whereas price points are points within a spectrum of possible prices. Retailers set different product price points to optimize their sales based on demand, wholesale and inflation rates, and brand image.
How should you decide on product price points?
When assigning price points to products as a retailer, there are a few things to consider first. How can you maximize the number of sales? What is the secret to standing out amongst your competitors? The following are methods we recommend when deciding price points for e-commerce retail.
Product and market research
Assessing the market of wholesale prices of products and/or materials that your business uses can help you determine which source can give you the best value for your money.
Figuring out a range of viable price points (maximum, minimum) to abide by gives you boundaries based on what suits the financial state of your business, and you can alter them over time if needed.
What does your brand stand for? Does your brand specialize in budget products or higher-end? A budget grocery store would aim to make products as cheap as possible for customers after factoring in all costs and profit margins. In contrast, a brand more focused on sustainable, naturally produced, fancy soaps may use higher price points to stay true to their brand by including ethical and social responsibility in their branding, for example, offsetting carbon emissions for every purchase.
A study by Acierto.com in 2020 found that 93% of online customers compare the prices of a product several times before making a purchase. Comparing price points with your competition gives you insight into how you can place yourself in an ideal position to be chosen by customers over your competitors. Competitive price monitoring and dynamic repricing are tools designed specifically for retailers to stand out amongst their competitors regarding price points.
Assessing customer demand plays a massive part in pricing your products. If you sell a product that is high in demand, it may be wise to raise the price point as people are usually willing to spend a lot more to bag it before it sells out everywhere.
The human behavior of buying
As humans, we have a thought process when buying a product that enables us to justify a purchase before checking out. When building your selling experience, it’s helpful to put yourself in the shoes of your potential clients.
When a shopper sees two listings of the same headphones next to each other, but one of them has an extra case for no added cost, most will prioritize the listing with the freebie as it gives the impression of being a good deal. However, the ‘good deal’ is a premeditated reference pricing strategy intending to attract more buyers by simply showcasing the comparison to shoppers. This same strategy is in action when retailers display a pre-sale price next to a shiny sale price, so customers perceive that they are lucky to have found the deal.
Another strategy is price anchoring, which includes presenting different options for a product or service at a spectrum of price points. For example, when a streaming service offers three types of user subscriptions, Basic, Plus, and Premium, it’s often the case that the middle price is the true sales price of the service and the other two function as anchor prices. This technique gives clients a guide to different levels and features of a product and the perceived power to choose how much they are willing to spend. The way that the plan prices and features offered compare to each other side-by-side is crucial to a client’s decision-making process as it requires them to decide where their needs and wants fall on the spectrum of price points.
Test and try
No matter your pricing strategy, you will often need to test and try your prices and closely monitor how customers respond to them. After making changes to your prices you can check the success rate based on questions including:
Did your customer retention rate change?
Are you happy with the profit rates of sales (ROI)?
With fluctuating market activity and rising inflation rates, there should be no reason for products to stay the same price forever from the day that they are launched. The value of items and wholesale prices change over time, and if retailers aren’t reacting to these socioeconomic changes, their outdated pricing may be missing out on new opportunities.[/vc_column_text][us_separator][vc_column_text]
Pricing strategies
Each retailer uses one or multiple pricing strategies to attract and retain clients and reach their sales targets. The following are some of the most popular techniques that businesses currently follow.[/vc_column_text][us_separator][ultimate_icon_list icon_size=”40″ icon_margin=”10″][ultimate_icon_list_item icon=”Defaults-tags”]
Discount pricing (Competition based)
Giving discounts on your products can be a great practice to attract customers and sell out a product that’s selling slowly. However, having too many discounts can alter your brand’s reputation, with people perceiving you as a low-budget, low-quality brand if your prices are always discounted. Discount pricing strategies differ across different types of brands. A brand that advertises itself as a low-price budget brand would benefit from having more discounted prices shown on its website. In contrast, a brand with medium-priced products would benefit from a smaller selection of discounted items or a “Sale” section.
E-commerce retailers can autonomously stay up to date on their competitors’ price points by using Competitor Price Monitoring Software such as DataSearch.[/ultimate_icon_list_item][ultimate_icon_list_item icon=”Defaults-code”]
Dynamic pricing (Competition based)
Dynamic repricing (also known as smart repricing) uses machine learning to alter product prices according to an algorithm. A bot monitors a company’s competitor prices, compares them, and reacts by following the rules of the given algorithm (i.e., maintains retailer prices 5% cheaper than all market competitors). This allows retailers to autonomously change their prices to fit the market in the way they want.[/ultimate_icon_list_item][ultimate_icon_list_item icon=”Defaults-calculator”]
Cost-plus pricing (Cost based)
A cost-plus pricing strategy follows a straightforward formula by combining material costs, labor costs, and overhead costs with a percentage markup price. The markup price generates the profit and varies based on the retailer and product.[/ultimate_icon_list_item][ultimate_icon_list_item icon=”Defaults-key”]
Keystone pricing (Cost based)
Keystone pricing is a straightforward strategy where retailers sell their products at double the wholesale price that they bought them for. Essentially, this strategy is the same as cost-plus pricing, but the markup rate is always 100%.[/ultimate_icon_list_item][ultimate_icon_list_item icon=”Defaults-group users”]
Value-based pricing (Customer based)
Value-based pricing uses clients’ perceived product value to establish its selling price. Instead of using a product’s manufacturing and labor costs, they will focus on determining how much clients are willing to pay for a product. Through solid branding and marketing, a company can charge twice as much as its competitors and still have customers willing to pay a higher price for their perceived value[/ultimate_icon_list_item][ultimate_icon_list_item icon=”Defaults-line-chart”]
Price penetration (Demand based)
Penetration pricing is a strategy that initially sets a low price for a product to gain a market share and then gradually raises the cost over time once a stable client base has been established. This strategy is used by businesses that have return customers who commit to their product and won’t drift away from the brand if product prices rise. For example, streaming services Spotify and Netflix began with low-price subscription rates and then continued to raise prices over time as their user base grew exponentially. The services that Spotify and Netflix provide have become ingrained in so many users’ daily lives that they “can’t live without” them, so raising their prices does not affect their client retention rates.[/ultimate_icon_list_item][ultimate_icon_list_item icon=”Defaults-area-chart”]
Price skimming (Demand based)
The price skimming strategy uses high demand to price a product/service at the highest price that clients are willing to pay initially and then lower it over time. This strategy is mainly used for innovative, high-demand products that are newly entering the market and don’t have much competition.[/ultimate_icon_list_item][/ultimate_icon_list][us_separator size=”small”][vc_column_text]
Summary
To conclude, The premise of price points is product prices on a spectrum that are strategically chosen to attract more sales. Retail product price point strategies aimed at attracting and retaining clients are determined through product and market research. Your pricing strategy depends on factors including your brand’s image, marketing, competition, demand, and wholesale costs.
Pricing strategies include competition-based, customer-based, demand-based, and cost-based methods. Competition-based strategies, including discount and dynamic pricing, monitor competitors’ pricing and use the data to inform more price points that aim to be more attractive than them. Retailers and e-commerce sellers can use competitor price monitoring, such as DataSearch, to quickly and efficiently track and react to competitor price points. Demand-based strategies base their price points on how the demand for a product impacts the amount of money that customers are willing to spend over time. Cost-based strategies focus purely on the true costs of a product’s wholesale/material/overhead costs and add a markup percentage rate for profit. Customer-based strategies consider how much people perceive a product’s price. Retailers can use one or more of the mentioned pricing strategies to optimize sales and client retention rates.
You can also use strategies that organically change how clients perceive prices by changing how you present them on a webpage. Reference pricing and price anchoring show visual references, such as pre-sale prices, to clients to give the perception of free choice and good deals to attract more sales.
Even after implementing product pricing strategies, we recommend testing and closely monitoring any price changes to see how consumers react. Price points should also change over time depending on demand and socioeconomic factors such as inflation and wholesale costs.[/vc_column_text][/vc_column][/vc_row]
Competitive price monitoring software is a program designed for businesses to track their market competitors’ product or service prices. The primary client base for these programs is businesses in the eCommerce industry. It works by giving your list of competitors to the system, which then gathers the prices and products over time, detecting and alerting you of any changes.
Keeping tabs on your competitors’ market activity helps you to act and react to ongoing business strategies. Let’s say your direct competitor implements a 20% discount on a selection of products. The monitoring software can collect this information and directly inform you of the products in question and their discounted prices. Furthermore, the system gathers product images and descriptions, giving you a complete view of your competitors’ products side-by-side with your own. The data that you receive is ultimately designed to help you take control and update your competitive pricing and marketing strategies.
Competitive price monitoring software usually includes direct pricing comparisons where the software matches your products with your competitors and compares their prices side-by-side. The ability to quickly and directly compare the prices of thousands of products on one platform is a potent tool for you to reconsider the retail prices of your stock.
A study by Acierto.com in 2020 found that 93% of online customers compare the prices of a product several times before buying. You can use the price comparison feature to ensure that your prices always stand out to customers looking for the best deal in the market.
Additionally, specific software, including DataSearch, can provide users with suggestions based on the highest and lowest prices in the market, making your workflow even more streamlined.
Apart from your product competitors, you can track the prices of suppliers you buy products from (outsourced or raw materials). For example, if you own a bakery and buy your flour from an external company, you can monitor the flour prices of that company and other flour suppliers to compare price changes and swiftly keep track of the best deals in the market.
You can benefit from valuable insights and analysis from easy-to-read and digestible charts showing price changes over time. Looking at a visualization of data is a lot easier for us to understand and react to changes rather than a text document of raw data – price monitoring software does this all automatically for you.
Moreover, automatically generated price change graphs can also be automatically integrated into your regular business reports.
By keeping a close eye on your competitors’ pricing strategies, you have the chance to learn from any mistakes they make. This allows you to detect missed opportunities and fill the gaps in the market that others aren’t.
Price monitoring software assists you in upgrading your selection of products/services by tracking the new products/services that pop up over time from your competitors. You can even identify new competitors you were unaware of and actively put them on your radar.
Digital automation saves you and your employees from having to perform the tedious and repetitive process of manually monitoring your competitors. Automation is especially beneficial for businesses dealing with mass product retail, such as supermarkets and electronics retailers. Instead of your team going through hundreds of thousands of products one by one, comparing prices with your competitors, the software does it for you in minutes.
Furthermore, the price monitoring software does the pricing comparison process frequently, automatically detecting new changes for you.
With streamlined monitoring software, you can eliminate the human errors of the manual monitoring process while getting more than triple the amount of data in half the amount of time.
Price monitoring software provides you with automated price change alerts to your email or directly to your phone. Being notified of the latest real-time market changes keeps you up-to-date and ready to respond to competitor behavior as quickly as possible.
Price change alert features are also very beneficial for businesses who want to track their suppliers, as the slightest change in price can cause a more significant ripple effect when buying supplies in bulk.
New technology comes with new solutions. Regarding price monitoring, dynamic repricing goes a step further. Dynamic repricing systems can alter your company’s prices according to competitors’ price changes. Repricing ensures that your prices are always lower than your competitors, which can be crucial for retaining customers who do product research across different companies selling the same products.[/vc_column_text][us_separator][vc_column_text]
10. You can get creative with it
A crucial part of innovative competitiveness is creativity. Clients of price monitoring receive their competitors’ pricing data, but it doesn’t end there. Various ways monitoring software users can take advantage of the swift collection of data include: improving brand health, inflation tracking, compliance analysis, and international price verification.
At DataSearch, we encourage our clients to express new ideas and solutions that we can develop for them.[/vc_column_text][us_separator show_line=”1″ thick=”3″][vc_column_text]
Our sub-brand DataSearch is a specialized price monitoring software capable of swiftly gathering and matching thousands of product prices. Contact us to learn more about our services.[/vc_column_text][us_separator show_line=”1″ thick=”3″][vc_column_text]
[vc_row][vc_column][vc_column_text]The eCommerce market’s pricing and marketing strategies constantly change to fit the times and trends. On average, a person looking to purchase a product online will visit at least 3 websites before spending their money. Researching products as a customer is currently more effortless than ever, with most shops accessible through a few clicks on Google. So, why not make the most of all the publicly available data on the internet to make sure your business stands out from the crowd? Price intelligence is a relatively new way to keep tabs on your competitors without the hassle of manual monitoring.
What is price intelligence?
Price intelligence refers to processes including automated price data collection for monitoring and analysis purposes. This includes crawling and scraping, competitor price monitoring, and dynamic repricing. Price intelligence services offer businesses the ability to know where they stand amongst their competitors with product matching, price change alerts, and suggested price values.
Significant factors to benefit from price monitoring include:
Automatic and frequent recollection of prices to keep on top of competitive markets
Data is converted into a convenient, easy-to-read and interactive format
Dynamic repricing options allow automatic repricing based on competitor activity
Set new marketing campaigns, e.g. discounts, to stand out to potential customers
Saved time and effort of manual price research
Gives you guidelines to follow when marketing a retail business
[/vc_column_text][info_list font_size_icon=”24″ eg_br_style=”none”][info_list_item list_title=”Online retailers” icon_type=”custom” icon_img=”id^4231|url^https://soft-surge.com/wp-content/uploads/2021/04/eshop-1900399-1608501.png|caption^null|alt^E-Shop screen icon|title^E-shop screen icon|description^null” animation=”swing”]Example: You own an eshop that sells iPhones online to customers in Cyprus. As many other shops also sell iPhones, your shop uses price intelligence to monitor your competitors’ product prices and make better business decisions, e.g. clarify your position in the market, have better value prices than everyone else, and dynamic repricing[/info_list_item][info_list_item list_title=”Manufacturers” icon_type=”custom” icon_img=”id^5336|url^https://soft-surge.com/wp-content/uploads/2022/05/power-plant.png|caption^null|alt^manufacturer|title^null|description^null” animation=”swing”]Price intelligence is not only used for tracking competitors but B2B as well. Manufacturers may benefit from the service by keeping track of material suppliers’ price changes with little-to-no manual effort. Example: You have a car manufacturing business and want to monitor the prices of the parts you buy from suppliers. You use a price intelligence system that scrapes price data from all of your suppliers’ websites on a regular basis. This service allows you to have a ready-made regulated report of material prices from as many sources as needed. As a result, you can proceed to make budget or supplier adjustments as you see fit.[/info_list_item][/info_list][us_separator][vc_column_text]
So, will you use Price Intelligence?
To sum it up, price intelligence includes ways for online retailers to collect pricing data from the web through web crawling and scraping for monitoring purposes. Smart price monitoring matters because it provides a modern solution to the time-consuming act of manual monitoring. Retailers benefit from the service with top-speed results, frequent automatically created reports and the possibility of dynamic repricing. Ultimately, businesses benefit from the smoothing of their workflow to focus on strategising and improving their campaigns. Furthermore, manufacturers may also benefit from using price intelligence to monitor the price data of material suppliers efficiently.
If you own a business in a competitive market with constantly changing prices, price intelligence may be right for you.
Explore Soft Surge’s online price monitoring service to get started on upgrading your business strategies.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]Working in the eCommerce industry takes plenty of time and effort, from customer support to product management and fulfilling orders. At the same time, you have to ensure your marketing strategies attract your target audience over your competitors, primarily if you sell mainstream products.
What if there was a way to guarantee that your product pricing consistently outranks your competitors? Solutions such as dynamic repricing allow you to stand out from the crowd with minimal manual effort on your end.[/vc_column_text][us_separator][vc_column_text]
What is dynamic repricing?
Automated or dynamic repricing is when a system automatically adjusts pricing values based on an algorithm. The algorithm is triggered when the price monitoring system finds that your competitor(s) have altered their prices outside a given bracket. Then, the repricing system changes the costs of your products accordingly.
Dynamic repricing systems are most suitable for established businesses looking to automate their workflow whilst remaining competitive in their respective markets.[/vc_column_text][us_separator][vc_column_text]
How does automated repricing work?
[/vc_column_text][info_list font_size_icon=”24″ eg_br_width=”3″][info_list_item list_title=”Crawling & scraping” icon_type=”custom” icon_img=”id^3925|url^https://soft-surge.com/wp-content/uploads/2021/03/scraping.jpg|caption^null|alt^Web Scraping|title^Web Scraping|description^null” animation=”swing” info_list_link_apply=”title” info_list_link=”url:https%3A%2F%2Fsoft-surge.com%2Fwhat-is-web-scraping%2F|title:What%20is%20Web%20Scraping%3F|target:_blank”]The process of dynamic repricing starts with data collection. This entails web crawling and scraping of your competitors’ eCommerce sites.[/info_list_item][info_list_item list_title=”Price monitoring” icon_type=”custom” icon_img=”id^4818|url^https://soft-surge.com/wp-content/uploads/2021/07/price-monitoring.png|caption^null|alt^Price monitoring datasearch|title^Price monitoring|description^null” animation=”swing” info_list_link_apply=”title” info_list_link=”url:https%3A%2F%2Fsoft-surge.com%2Fprice-monitoring-explained%2F|title:Price%20Monitoring%2C%20Explained|target:_blank”]The next step is to compare the collected prices of products side-by-side. The system uses auto-matching to compare products with the same product codes, but you can also manually match products to your liking.[/info_list_item][info_list_item list_title=”Repricing algorithm” icon_type=”custom” icon_img=”id^5305|url^https://soft-surge.com/wp-content/uploads/2022/04/repricing.png|caption^null|alt^repricing|title^repricing|description^null” animation=”swing”]Finally, the repricing algorithm uses predetermined rules to decide whether your product prices fall into an unwanted range compared to your competitors (e.g. your prices are too high or low). Then, the system changes your prices under the rules you have set either automatically or notifies you for your approval.[/info_list_item][/info_list][vc_column_text]The automated repricing system sustains up-to-date prices by repeating the process over time.[/vc_column_text][us_separator][vc_column_text]
Case Study
For example, a shoe retail company in Cyprus sells new Adidas shoes in their online shop. The shop’s target audience is young people who want to buy sneakers online in the Mediterranean region. The eCommerce market for Adidas shoes is very competitive, with many prospective clients comparing different retailers and their prices before finally making a purchase.
The company wants to increase their sales by offering prices at least 10% lower than all of their key competitors, without going under 40 euros.
We would program the repricing system to:
Collect the prices of the key sneaker competitor companies in the Mediterranean
Compare the prices with the client’s own
Make any changes to ensure the client’s products are under the 10% bracket, given that they don’t fall under 40 euros.
This case study is ideal for dynamic repricing services as the highly competitive, fast-moving market is hard to keep track of manually when there are hundreds of products per shop. Automated repricing attracts customer purchases with the best prices on the market while saving time and effort for eCommerce retailers.[/vc_column_text][us_separator][vc_column_text]
Possible repricing rules
Below/above key competitors by a %
By position in the market
Triggered by low inventory, e.g. clearance sales
AI machine learning. AI is given an optimization goal, and we allow it to learn what prices work best through trial and error.
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What we offer
Our price monitoring and data aggregation brand, DataSearch, gives us a solid base to work with when implementing smart repricing systems. We offer a service to clients on request for collection, integration, and dynamic repricing systems.
Make your prices pop with automated pricing solutions![/vc_column_text][us_separator][us_cta title=”Want to take control of your price points?” title_size=”25 px” controls=”bottom” btn_label=”Contact us” btn_link=”url:mailto%3Ainfo%40soft-surge.com|title:Contact%20us|target:_blank” btn_style=”4″ css=”%7B%22default%22%3A%7B%22color%22%3A%22_content_bg%22%7D%7D”]With the power of DataSearch, you can find, receive, and analyze pricing data with the click of a few buttons.[/us_cta][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Sources: