Imagine a world where you were always able to command the best prices for your products and still make a profit?
That world is well within your reach if you start implementing smart pricing tactics.
Our goal with Prisync is to help all ecommerce store owners globally get smarter at pricing their products to achieve a competitive advantage over their competitors.
One way to achieve this is through smart pricing. Smart pricing helps you stop undercutting your prices to achieve competitive advantage.
In this post, we’re going to look at a number of ways you can implement smart pricing to your eCommerce store to gain competitive advantage and increase your profits.
What is ecommerce smart pricing?
eCommerce smart pricing involves actively monitoring your own prices and comparing these to your rivals. But this isn’t all. Simply monitoring your own prices will give you a one-dimensional overview of your pricing and how this affects your profits.
However, if you take a multidimensional analysis at both yours and your competitor’s pricing, you can ensure you’re consistently demanding the best prices your customers are actually willing to pay, despite the highly competitive eCommerce industry.
You can still be in profit even if you’re competitive
Most ecommerce store owners dream of being the most competitive in their particular market. But usually, being competitive means that they follow a race-to-the-bottom strategy and profits are therefore low.
Just because you aim to be competitive, doesn’t mean you have to be the cheapest and lose on out profits.
In the repricing strategies blog post, we used the diagram below to highlight how you can be competitive while still increasing your profits by watching your overall costs.
Consider using this smart pricing strategy if you want to sell as many products as possible. It works well for ecommerce businesses who have a large inventory of products they need to get rid of. But remember, anything you can do your customers can (do better) so remember that if your competitors can take the same approach and lower their products prices too, it might not be a viable long-term option.
Smart ecommerce pricing in action
CoolSafety, one of our clients successfully used a range of smart pricing in order to increase their turnover. Let’s look at little deeper into their approach.
Coolsafety are a Netherlands based company selling protection apparel like gloves and helmets. They’re a fairly established company of 15 years with a range of different subdomains for specific categories in their industry.
Their average basket size is 85 euros. Before they implementing smart pricing (using Prisync), they struggled to track competitors continuously. Therefore they couldn’t effectively implement smart pricing strategies as they didn’t have the best data to go from.
After six months of taking a multidimensional approach to pricing comparison tracking, Coolsafety were able to respond to their customers quicker, see price adjustments on a daily basis, as opposed to an ad-hoc one and increase their turnover for a number of key products.
Smart pricing allows you to analyze new markets before entering
Using a smart ecommerce price comparison software (like Prisync) will allow you to analyze new markets before you actually take the plunge and enter one.
It gives you insights so that when you do decide to launch you can set up your pricing structure correctly. Let’s look at an example.
Brew Tea Company might decide, based on users demand they should expand into the coffee niche, giving their customers another type of product to buy from them.
Without prior knowledge of this industry, how do they know how to price their products. Instead of choosing arbitrary numbers from the air, Brew Tea Company could and should, use a price comparison software to analyze the current coffee market, see what sort of competitors they’ll be competing with and use this data to take with them to suppliers based on the current market trend and demand for coffee.
It would give them an edge when it came to getting the right foot into a new industry by charging no more than the industry accepts, as well as not pricing themselves too low compared to their competitors.
Amazon and Walmart’s approach to smart pricing?
It’s no secret that both Amazon and Walmart using various smart pricing approaches to decide on how much each of their items should be.
There are even articles that tell consumers how to not fall into the smart pricing trap. This one advises consumers to shop secretly by using incognito windows and deleting cookies.
But for the average person who doesn’t know about smart pricing tactics, Amazon and Walmart are able to generate serious revenue.
There are various tools that show the extent of how the big retailers and businesses in eCommerce are using smart pricing strategies to optimize their pricing.
For example, camelcamelcamel is a free Amazon price tracker that shows the variation in pricing for individual items over time.
You simply copy the URL of the item you want to track and see how the price has changed over time.
A second tool, InvisibleHand also allows you track various retail purchases. It’s a chrome extension that lets you know when there are cheaper prices available for the same item.
The tool works for a range of different stores. The stores the tool works for largely depends on what country you’re based in and whether that specific shop operates in your country.
Using price comparison software gives you a smart advantage over your competitors because you have a holistic view of their current pricing strategies and can use this data to change your own pricing tactics.
Smart pricing solution takeaways
If you’re not tracking your competitor’s pricing automatically, you’re leaving money on the table. The money your competitors are taking for their own business.
In this blog post, we’ve looked at what smart pricing is and looked at a range of businesses who are already implementing smart pricing strategies to increase their profits and revenue.
Pricing is not a one-dimensional process and if you want to succeed, you need to think of it as multidimensional and consider all the different ways you can use pricing to your competitive advantage.