Does anything have intrinsic worth or value? A question many eCommerce business owners will ponder when it comes to defining their prices.
You see, the things is, your price is only as good as the one your customer perceives in their head to be good.
Think about it like this.
A house for $1? Seems like a great deal compared to what houses normally cost.
A house for $45,000,000? At this point, if you had this money to spend, you’d probably want to think carefully about the things you’ll have in your house and features available.
It all comes down to perception. If you can influence your shoppers perception on a broad scale so that they think your price is worthwhile, you can start navigating the conversation around pricing and demanding the prices you want.
But just how do you go about influencing ecommerce price perception and how does this fit into your pricing strategy? We’ll find out in this post.
Amazon, perception or reality
When it comes to ecommerce price perception vs. reality, it all comes down to the value proposition. Get your value proposition right and you can dominate the market. Get it wrong and the only the only perception your target customers will have of your brand or product is: low value.
Amazon are the pioneers when it comes to price perception. Amazon shoppers largely believe that by using Amazon they are getting a bargain. Alongside this, Amazon are able to offer shoppers benefits such as:
- Range of products
- Convenient shopping experience
But their low prices are often what draws shoppers to their marketplace and creates an almost instinctual offering.
Need to buy something? Let’s check Amazon first.
The process normally goes as follows:
Browse your items on another store -> first check Amazon
It rarely follows the pattern of
Browse your items on Amazon -> check another store.
By dominating a large proportion of eCommerce sales daily, Amazon are able to maintain their perception that their prices are best.
Amazon do this through offering many products at lower costs. What many shoppers don’t know (or don’t care about if they do know) is that Amazon recoups its lost margins on other items.
Because of the other benefits listed above (security, ease of use etc), customers don’t mind spending more on other items knowing they’re getting a deal on certain products. In a crux. It just makes sense to buy it all from Amazon.
This is their value proposition and this is how they’ve been able to dominate and implement price perception.
But how does this strategy fair for smaller eCommerce stores who simply find it difficult to compete with the likes of Amazon?
Smaller eCommerce stores price perception
When it comes to smaller eCommerce stores, one of the popular tactics for price perception is a race-to-the-bottom to get the lowest prices.
However, this doesn’t help your overall margins when you’re cutting out the profit you make per sale. It doesn’t have to be this way, though.
There are usually two ways a customer will value your item and decide what it’s worth:
- Their own intuition
- Compare it to another product
We’ve already spoken about how giants, like Amazon don’t have to deal with the comparison factor as consumers rarely compare Amazon prices to small-time eCommerce retailers.
However, every retailer needs to be concerned with the intuition factor. Intuition plays a large role because it helps a consumer ‘know’ how much something is worth to them.
For smaller retailers, to increase price perception there are a number of tactics you can employ so that a customer’s intuition when they see your product is “this is great value”.
Let’s look at some tactics.
Increase your ecommerce price perception through effective branding
In eCommerce, if you want to demand higher prices, branding is everything. It’s what sets you apart from part-time store owners and puts yourself amongst the fully-fledged businesses.
Psychologically, when a customer sees a good brand, they automatically think higher prices. You can brand your product in many ways, from the marketing material you put out, to the product descriptions you use.
When you have a strong brand, customers are drawn to you and are happy to pay a premium for your products, especially when everyone else is.
Keepcup are a great example of a company who has used branding to increase their ecommerce price perception.
KeepCup are a reusable cup company that sells various products in the drinks industry.
Their large 12oz cup costs £22.00
However, a quick search on Amazon shows you can get a similar cup of similar size for £6.95 with free delivery. So why is it that someone would spend over double on a cup when they can get a similar one for cheaper?
Again it comes down to branding. If you’re researching reusable coffee cups, the name KeepCup will pop up often. This is largely due to their impressive marketing.
Because it comes up often in your searches (and thus in your mind) when it comes to making a decision, you’re drawn towards the more expensive option.
Looking at the Amazon cup, what brand is it? It’s hard to know and because of this, it’ll attract bargain buyers who are simply looking for the cheapest option and don’t care much for research.
Keepcup are able to attract their perfect audience and compel them to buy at a price point they perceive to be great value.
To improve price perception go above and beyond
We mentioned earlier how Amazon are able to gain and present a strong value propositon through their ease of use plus other factors. Just because your eCommerce store isn’t as big as Amazon, there are still ways you can improve your ecommerce price perception by going above and beyond.
You could offer all your products with free shipping and returns. This increases the price perception because customers are more or less happy to pay a higher price knowing they can return it free of charge if the product isn’t right for them. What’s more, if you have a great product alongside that, the chance of them returning it is slim.
UK clothing retailer, Boden offers all customers free delivery as well as returns. It takes away the friction some consumers have with buying clothes online as they’re unable to feel them.
In this scenario, customer’s average order value might actually increase, because they’re more willing to try different items, knowing they can send it back with ease.
You could also use customer service as your competitive advantage and offer around the clock live chat, or go as far as promising a reply for customers within a certain time frame. Note customers are impatient prefer to receive a reply in less time than you’d think.
Modcloth have various options for customers to get in touch.
They explicitly tell customers how and when they can get in contact. Knowing a support agent is only a click away is a really useful incentive for shoppers and will lead to an increased price and value perception of your brands and products.
Pay it forward to increase price perception
It’s no surprise, consumers love to shop with, and support, companies who give back to their local and global community.
When people are deciding what to buy and how to spend their money, they like the idea that their purchase can help someone else out.
It’s why TOMS shoe company does so well.
TOMS have always been known for their generosity when it comes to helping out poorer communities.
For every TOMS shoe you purchase, they donate a pair of shoes to someone in need. What’s more they have a range of different shoes they provide for those in need, based on their current situation and living conditions.
To buy a pair of TOMS classic woven shoes, you’d have to spend in the region of £38.00, to put that in perspective, I found a similar type of shoe for just £7.99. But customers return to TOMS because of all the hard work they do for those less fortunate.
If you want to increase your ecommerce price perception, why not see if you can utilize the concept of charity into your business. Give back to your community and your community will give to you.
Ecommerce price perception: the final words
In this article, we’ve broken down the idea of ecommerce price perception and how it affects the way shoppers view your store and your products.
We’ve looked at the idea of value proposition and why you need to understand yours in order to dominate your industry.
Why not see if you can increase your own ecommerce profits by instilling price perception tactics.