If you’ve read any of our content, you’ll know we are great advocates of using data to set your prices.
Only the issue for some people is that you don’t know how to analyze your prices or the data you have, whether this is about your own products or your customers.
If this is something you, as an e-commerce owner, has to deal with, you’re not alone. But the good news is, once you understand how to properly analyze the data you’re given you’ll know exactly how to raise or lower your prices at the right time.
In this article, we’re going to take you step by step to help you to better understand the data you’re presented with and what you can do with it.
What sort of pricing data can you collect?
Before you even begin analyzing the data you have, it’s important to know the types of data you can collect about pricing. Largely, however, it falls down into two categories:
- Your pricing
- Your competitor’s pricing
You might begin by tracking your own pricing, to see what you’ve charged customers in the past.
You also might (and should) be looking at your competitors pricing to give you an understanding of what they’re up to, what pricing strategies they use and their current increase or decrease tactics. Having a good understanding of this will allow you to profit from their pricing strategies to allow for higher margins and as a result, higher revenue.
And when you do start analyzing yours and your competitor’s pricing data, you’ll be able to benefit from:
- Knowing how to increase margins by adjusting your prices just at the right time
- Increase your sales potential
- Put yourself (and keep yourself) in a competitive position within the market
- Use your competitor’s prices to negotiate better costs with suppliers allowing you to refine your own cost management.
- Put together pricing strategies that are backed by data.
As you can see, there are numerous benefits from using data to fuel your pricing. Many companies already understand the importance of using data but are unsure how to analyze the data they do have, or where to collect it from.
Time to look at the strategies.
Take Amazon as an example
It goes without saying, in the world of e-commerce, Amazon is huge. They have a massive portion of market-share and this is aided by their team of data sources. This team’s main objective is to use the data available to them to help fuel their rapid and ever-increasing growth.
While Amazon is the giants in this industry, don’t be fooled into thinking you need to hire a data growth team (although doing so wouldn’t hurt).
Using a tool like, Keepa will show you just how much various items on Amazon fluctuate in price over time.
As a smaller e-commerce company, if you want access to your own and your competitor’s pricing data, you should employ a price comparison tool. Your competitors might already be using such a tool, but if they’re not, it gives you the opportunity to get ahead and reap a great return on investment from it.
What pricing data should you analyze
The most effective way to analyze your prices and data is to look at the data you have across a range of products over the longest time-span you can access.
Making sure you use a wide range of products (if not all of them) will allow you to have a thorough understanding of how your store compares to your competitors on a larger scale.
Looking at the data from the longest time-span you can access will allow you to have an accurate account of historical pricing and provide you with the most valid way to predict the future.
Ideally, you should be looking for two key things: “Who”, “When” and “How often”. This will allow you to get a clearer idea of their pricing strategies and positioning.
Note: when looking at competitors pricing, it’s helpful to only follow or track the competitors who offer products in similar product categories. It seems obvious, but for many, it isn’t. There is no point comparing the price of your t-shirt to the price of your competitor’s iPhone case.
Ideally, you want to be looking for data on the following questions:
- Who are your main competitors with products in a similar or the same product category?
- When do they change their prices?
- How much do they change their prices by?
- How often do they change their prices?
- How do they react to your other competitor’s price changes?
- Based on this data, what price changes do you predict for the future?
- How can I use this data to either up or cross-sell or maximize your price margins?
Using data to find answers to these questions will give you a sense of visibility into the true profit potential for your business and allow you to focus less on gut instincts. Putting analytics at the forefront of your pricing strategy creates a catalyst for extreme growth and profitability management.
Putting all this data into action will give you leverage your pricing and allow you to focus on profitability management. And by using software, you’re able to look at a multitude of different pricing variables and cases to help you analyze the otherwise unstructured data to find patterns, trends and various anomalies within the data.
Impact of using pricing data
But you need to remember that focusing on your monetization has a greater impact than retention or acquisition. Meaning, not looking to improve your pricing is leaving money on the table.
And what’s more, simply changing your pricing by 1% can increase your entire bottom line by up to 12.70%. So if you’re trying to increase profits and grow, use pricing data to improve the way you monetize your business.
Analyze your prices
Before the world of online shopping, if you wanted to analyze your prices or see what special offers your competitors were charging, all you’d have to do is go into their shop.
However, the e-commerce world moves much faster and manual price checking is an arduous and often difficult task without using a tool to provide you with quality data, especially if you plan to use that data to base your own strategies on.
So save time on manual competitor price tracking, use real-time, valid data and analyze that date to use to your advantage.
What pricing data do you analyze for your e-commerce store? Leave a comment below.