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Price Point: Understanding the Difference Between Price and Price Point

If you’re like most e-commerce owners, you spend a lot of time reading about e-commerce, discovering new ways to improve the way your site performs.

That could be the actual site itself.

It could be how you market the store.

But in many cases, what you’re really wanting to read about is how to improve your pricing.

You already know that getting your pricing right can often be the difference between an e-commerce store that performs well and an e-commerce store that doesn’t go anywhere.

So when you’re reading about pricing, it’s often common that you’ll come across two key phrases:

  1. Price
  2. Price point

In this post, we’re going to look at these two terms, understand what they mean and see if there are differences (if any).

So next time you start reading about e-commerce pricing, you know exactly what the author is talking about.

Let’s go!

What is price

When we think about price, we often think about how the level of demand changes with the price.

If we were to plot this on a graph, it would be a linear graph, with a smooth demand downward curve. Like the image below.

price and price point
Source: https://en.wikipedia.org/wiki/Demand_curve#/media/File:Supply-and-demand.svg

However, when we look at how pricing actually works in real life examples we see that consumers are the ones who affect the price and the price graph really has peaks and troughs.

What is a ‘price point’?

Now if we’re to think about ‘price point’ these are inflection points on the graph we spoke about before.

Price points could be along the price graph at any point, usually where the demand or price is at a maximum.

So, a price point is always a price, but a price is not always a price point.

Confusing?

Potentially.

But what’s more important is to know what people are referring to when they use the two terms.

Sometimes they’ll refer to a price point when they really just mean price.

Being able to discern which definition they’re actually referring to will give you clarity as to the point they’re trying to make.

How do price point and price differ?

Now that you know the difference between price and price point, it’s helpful to have a handy way to remember the two.

All you need to keep in mind is that a price point refers to a hypothetical, potential price.

For example, you might predict that you’ll be able to sell 1000 t-shirts at a $5 price point.

Whereas the price is the actual price it sells or sold at.

The price of a t-shirt is $4.50

price point and price
Source: https://searchvolume.io/

If you’re wondering whether to use price or price point when writing about e-commerce you’ve got a number of options.

You can use them in the ways we’ve described above – where price point refers to a hypothetical price and price refers to an actual price.

But you can also use them intertwined.

The phrase price has a much higher search volume than price point so you may decide to go for that simply because it has a higher search volume.

However, you could try and target price point, considering people often use them interchangeably.

As it has a much lower search volume, it could well turn out to be an easier keyword to target.

The key is, if you do decide to use these words within your marketing assets – that you do so with a sense of clarity as to what you mean.

Especially when it comes to money, confusing your customers or readers is a sure-fire way to send them straight to your competitors.

Examples of price and price point

Let’s look at some examples of price and price point used in real marketing material.

bigcommerce content
Source: https://www.bigcommerce.co.uk/blog/value-based-ecommerce-pricing-strategy/#how-to-execute-on-a-value-first-pricing-strategy

This paragraph by BigCommerce uses the phrase ‘price point’ effectively because they’re not talking about a specific price.

You’ll see that they’re trying to get you to use data to come up with a price. Because that price could vary, they use the phrase ‘price point’, rather than simply ‘price’.

shopify contnet
Source: https://www.shopify.co.uk/blog/26445508-psychological-pricing-is-your-golden-ticket-to-selling-more

In this post by Shopify, you can see that they’ve used the phrase ‘price point’ in the same way.

Had they of said “Apple’s laptops cost $1999 they would have probably used the term ‘price’ seen as they’re highlighting a specific price.

However, as they’re talking about a hypothetical, potential range of prices, they use the term price point.

Source: https://neilpatel.com/blog/5-psychological-studies/

You might think at first that this use of ‘price point’ is incorrect, given that the writer is talking about an actual price, instead of a hypothetical.

However, if you look at the numbers in the context of the text that comes before it, you’ll see that they’re actually talking about a hypothetical psychological study.

So you see, the two words can be used in any way, we just need to stress the importance of making it clear whether you’re talking about a real, actual price, or a hypothetical, potential price.

Takeaways

So what have we learned?

Well, the first thing to note is there is a very hazy line between the definitions of price and price point.

Although there are instances where the two have different meanings, there are also just as many instances where the two are used in different circumstances despite both having the same meaning.

If you do read either instance of the phrase, make sure you look closely as to the context in which it was used to ascertain it’s meaning.

Have you ever come across these two different meanings? What’s your thoughts. Comment below.

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