![]() A similar strategy is often followed by the hotel segment as well. During high demand periods like holiday season and weekends, prices go up with a rise in demand, and vice versa. Demand pricing strategyĭemand pricing strategy is where prices are determined in correlation with demand to maximum sales for during high demand periods. This eCommerce pricing strategy is not always the best way to establish the right price for your product as it is often determined with minimum research and does not consider consumer demand or competitor price strategies. In this strategy, a prefixed profit margin is added to the total cost of the product which becomes your selling price. Cost-plus pricing strategyĬost-plus pricing strategy is one of the simplest methods of determining a price for your product. This blog post provides a glimpse of four major eCommerce pricing strategies and deep dives into competitive pricing strategy, which is used by most companies around the world. Many competitors are eschewing the various pricing models and methods in favour of competitive pricing but setting pricing strategies based on competitors’ behavior isn’t an easy task. In order to ensure sustained profitability, firms have to set a price that: covers the production cost, contributes to company overheads costs, and delivers suitable profits. Some of the factors that companies consider when setting prices are costs, competition, and price sensitivity. These factors are also important considerations while setting the right price in eCommerce. Comparing prices online is easy and customers are well aware of the monetary value of a product. Businesses need to keep an eye on their competitor’s pricing strategy while setting prices to get the much needed competitive edge in the market. With the rise in eCommerce sales, and the friction-less comparison shopping digital commerce enables, competition in the market has gotten much more aggressive and real-time. The price is one of the first things that a consumer notices about a product and is one of the deciding factors when it comes to their decision to buy it or not. In fact, pricing is one of the most important components when it comes to creating marketing strategies. It can set a price to stop competitors from entering the market, or to increase its market share, or simply to stay in the market. A business can set a price to maximize profitability on each unit sold or on the overall market share. An effective pricing strategy is essential to help a business maintain competitive pricing, such that it may set and offer prices that are in line with competition.Ī business can pick from a variety of pricing strategies based upon a variety of different factors.
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