How To Create The Best Pricing Strategy For Online Business

9 Pricing Strategies For Online Business · Value-Based Pricing · Cost-Plus Pricing · Competitive Pricing · Loss-leader pricing · Dynamic pricing. HowToCreateTheBestPricingStrategyForOnlineBusiness📳 by TaylorWells February25,2021 PricingStrategy 0 What’saneffectivepricingstrategyforanonlinebusiness?Howdoyousetyourprices?Areyourpricestoohighorlow?Isyourproductportfoliogeneratingtheprofitvalueyouareexpecting?   Settingpricesforonlineproductsandservicescanbeadifficulttask.Thepriceyousetdirectlyaffectsthedemandforyourproductsandalsothemarginperunit.Meaning,modifyingyourpricesisaquickfastwaytosellmoregoodsortoearnmoreprofitforeveryitemsold.   However,veryfewonlinebusinessespaycloseenoughattentiontohowtheysetandmanagetheirprices.Manycompaniesestablishtheirpricearbitrarily.Forexample,pricingwithoutanyrulesisaverycommonpricingpractice.Soispickinganumberoutofthinairormerelyimitatingthecompetition’spricing.Allofthesebadpricingpractices,inshort,leadtocashflowand/orP&Lissues.   Therightpricingstrategyforonlinebusiness,conversely,canquicklyhelpyouscaleandincreaseyourbusinesswhilegeneratingacceleratedrevenueandmargingrowth.   Butwhatdoesagoodpricingstrategyforonlinebusinesseslooklike?   Whendevelopingapricingstrategyforonlinebusinessit’sveryimportanttokeepyourcustomersattheheartofyourstrategy.Whatdotheyvalueaboutyourproducts?Whatandhowdotheyconsumeyourproducts?Doyouknowwhatkeepsthemupatnight?Doesyourbusinesscomeclosetofixingsomeoralloftheseproblems?   Inessence,agoodpricingstrategyforonlinebusinesscansupportyouromnichannelsalesstrategy.Whileabadpricingstrategyforonlinebusinesscandrivecustomersaway.   So,inthisarticle,we’llcontinuetodiscusspricingstrategiesforonlinebusinesses.We’lldothisby,firstprovidingyouwithsomeofthebest-knownpricingstrategiesforonlinebusinesses.And,then,offeringsometipsandtechniquesonhowtousepricetogetapositiveresponsefromcustomers.   AtTaylorWellsadvisory,weunderstandthatproductpricingcanbeacomplexprocess;however,webelievethattherearebetterwaystodeterminetherightpricingstrategyforonlinebusinessthansimplyguessing.   Wearguethatcompaniesshouldunderstandthedifferencesofeachpricingstrategyandlearnwhatworksbestfortheirbusinessandcustomerbase.   Bytheendofthearticle,youwilllearnthebestpricingstrategyforonlinebusinesstohelpyouscaleanddriveprofitabilitywithoutexperiencinglagsinrevenueordipsinvolume.   StrategicTeamPlanningForPricing&CommercialTeams!   Whatisapricingstrategyforonlinebusiness?   Apricingstrategyforonlinebusinessisapublisheddocumentwithaclearlystatedplanofactionincludingdefinedobjectives,goalsandoutcomes.Thisstrategydocumentisdistributedtoeveryoneinvolvedinpricing(e.g.pricesetting,policy,negotiations,operations).Thedocumentcantakemanyformsdependingontheapproachtakenanddynamicsinthemarketi.e.,supplyanddemand,customerpreferences,industry,productstrategy,positioningandcompetition.   Pleasecopythecodebelowtosharethisinfographiconyourwebsite,includingattribution.
InfographicProvidedByTaylorWells 9PricingStrategiesForOnlineBusiness   Comingupwiththerightpriceforonlineproductsandservicescanbebothexcitingandnerve-wracking.Wheredoyoustart?Whatistherightprice?   Setthepricetoohigh,andyoudon’tsellanything.Setthepricetoolow,andyoulosemoney.   Hereare9ofthebestpricingstrategiestosetonlineproductsandservices:   Value-BasedPricing   Value-basedpricingsetsinvoicepricesforcustomersbyunderstandinghowdifferentcustomersvaluethebusiness’products,services,operationsandbusinessmodel.   Itisastrategythatenablesbusinessownerstomaximisemarginsbyfocusingonhowmuchtheycanmakefromtheirproductsandservicesratherthanhowmuchitcoststomakeproductsandservices.   Cost-PlusPricing   Cost-pluspricingstrategyispurelyacost-basedstrategy.Abusinessownerwouldsetpricesusingcost-plusbyallocatingcostsacrossalltheirproductsandthenaddingasimplisticpercentagemarkupontoptoreachatargetmargin.   Cost-plusfocusesonproductcostsanddistributioncostsasthebasisofpricesetting.Itdoesnotconsidercompetitorpricing,customer’swillingnesstopayortherelationshipbetweencostsandvolumeandvolumeonprice.   CompetitivePricing   Competitivepricingsetspricepointsbycomparingproductorservicespricinginrelationtocompetitors’pricesforthesameorlikeproducts.Abusinessownerwouldtaketimetocapture,monitorandlineupcompetitorpricesinanintelligenceregistertothendecidewheretheywillpositionandpricetheirproducts.   Priceskimming   Priceskimmingisasalesandmarketingstrategydesignedfornewornovelproductsandservicesinthemarket.Pricesaresetrelativelyhighinthemarketwiththeexpectationthey’lldecreaseandstabiliseovertime.   Businessownerswoulduseapriceskimmingstrategytorecoupsunkencostsquicklyinanticipationthattheircompetitorsarelikelytocreateasimilarproductorreducepricestogainmarketshare.   Loss-leaderpricing   Loss-leaderpricingsetsspecifickeystoneproductscompetitivelyinthemarkettolockcustomersintohigh-pricedcomplementaryproductsorservices.   ThinkNespresso:Thecoffeemachineispricedverycompetitivelywhilethecomplementarycoffeepodsarepricedrelativelyhighbecausewithoutthemthecoffeemachineisofnouse.   Dynamicpricing   Dynamicpricingsetspricespredominantlyonchangesinsupplyanddemand.Thismeanspriceschangefrequentlyandarenotfixed.Pricesarecalculatedusingalgorithmsorformulathatseektoutilisecapacityanddrivedemand.   Moresophisticatedalgorithmsalsoconsiderchangesincompetitorpricing,costfluctuations,marginandrevenuetargets,certainbusinessconditions/rules,andeconomicandmarketconditions.   Premiumpricing   Premiumpricingisastrategyusedbybusinessownerstosetpricesforluxuryorhigh-ticketproducts.Pricesareintentionallysetveryhigh(wayhigherthanthemarketaverage)tocommunicatebrandpositioningfortheprincipalpurposeofanchoringbuyerstoveryhighpricepoints.Thepopularexamplesareluxurybags,designerclothingandaccessories.   Anchorpricing   Anchorpricingsetsaproduct’spricepointinrelationtotheircustomers’referenceprice.Acustomer’sreferencepriceisaheuristic(ruleofthumbestimation)thatcustomersusetoquicklyhelpthemdecidewhethertobuyaproductornot.   CharmPricing   Charmpricingsetspricesusingoddnumbers–especially9–toenticecustomerstobuyorbuymore.Itisapsychologicalpricingstrategythatfindsthatoddpricepointshavemoreofapsychologicalimpactoncustomersthanevenpricepoints   Pricingdoesn’thavetobeagameofchanceanymore.Applysomebasicprincipleslistedaboveandenjoysteadyandprofitablesalesasyouronlinebusinessgrowsandchanges.   Nowyoualreadyknoweverythingthatyouneedinnailingyourpricingandcreatingapricingstrategyforyouronlinebusiness.Bearinmindthoughthatpricingisvariable. Pricesalwayschange,andyoushouldkeepontopofyourpriceswhilerunningyourbusiness.Customersaresmart,therefore,makesmartdecisionsalsowithyourpricingstrategies.   Discussion   Akeyelementofasuccessfulpricingstrategyforonlinebusiness,then,isyourunderstandingofyourcustomerbase.Inparticular,trackingcustomermetricssuchascustomerfrequency,willingnesstopay,referencepricing,forecastingdemand,customerspendandmarketgrowthetc.However,themostimportantaspectofasuccessfulpricingstrategyisdefiningyourcustomers’valuedriversbyproductandsegment.However,todothis,youfirstwantto:   Identifyyourcustomer   Tohelpyoubetterunderstandyourprospectivecustomers,knowthedemographics,disposableincome,traits,andbuyingbehavioursofyourtargetmarket.Bydoingso,youcancreateapricingstrategythatsuitswellforyourbusiness.   Forexample,somecustomersareprice-sensitivewhileothersarewillingtopayforhigh-pricedproducts.Therefore,it’ssignificanttodoresearchandnotjustuseapricingstrategyforonlinebusinessbasedonaguess.   Letyourbusinessstandout   Yourbusinessshouldstandoutamongthecompetitorstotrulydifferentiatefrommanye-commercebrands,andthecorrectpricingstrategyforanonlinebusinesscanhelp.   Forinstance,H&Moffersstylish,high-quality,andfashionableclothingatanaffordableprice.Theirpricingstrategyhelpedthembecomeapopularbrandbecauseitfilledagapintheclothingmarket.   Implications   Pricecanplayabigroleinaconsumer’sbuyingdecisions.Butshoppersnowadaysaresmart.Iftheythinkyourpriceisn’talignedtotheirneeds,thentheylookelsewhere(gotothecompetitors).   Creatinganonlinebusinessrequiresalotofpriceexperimentstobetterunderstandwhichpricingstrategyworksbestforyourbusiness. Thesmartapproachistosetatargetforeverycampaign;startsmallandthenmeasuretheresults. Also,understandyourtargetmarket.   Alotofcompaniesusea“setandforget”methodforpricing.Thesebusinessesareleavingmoneyonthetable.So,makesurethatyoudon’tfallintothistrap.Continuetotestdifferentpricingstrategies,usingtheninetechniquesdiscussedinthisblogtogetyoustarted.   Conclusion   Ifyouwantasuccessfulonlinebusiness,stopreducingprices,insteaduseintelligentpricingstrategies(discussedabove)tomakesuresalescontinuetogrow.   Ensureyourpricesaretrulyreflectiveofthevalueyouoffertocustomers.Youcanusepsychologicaltechniquestopersuadecustomersthatyourpricesaren’tsoexpensive.Butthisisonlyashorttermmove.Oryoucangenuinelytrytounderstandyourcustomersandtakethetimetoidentifytheuniquecustomervaluedriversthatunlockmoremarginforyourbusinessandyourcustomers.   Clickheretoaccessyourfreepdfguideondrivingpricingstrategyinyourbusiness.   〉〉〉ContactUsforaFREEConsultation〉〉〉   StrategicTeamPlanningForPricing&CommercialTeams!   Share 107/272 RelatedPosts HowAnOmnichannelRetailStrategyCouldImproveMultichannelPricing PricingStrategy 0 HowToTransitionYourECommerceOperationsStrategyForRemoteWorkWithMinimalDisruption PricingStrategy 0 DynamicPricingRules–ALookattheUnfoldingElectricVehicleTrends PricingStrategy 0 LeaveaReplyCancelreplyMessage Name Email Website Requiredfieldsaremarked Δ Categories marketingstrategy(7) OrganisationalDesign(13) Podcast(36) PricingCapability(63) PricingCareerAdvice(11) PricingRecruitment(15) 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