How to set a pricing policy for your eCommerce

This goes beyond the evidence which leads us to think that an ill-defined pricing policy can compromise the viability of a project, okay, that is very clear. Maybe, you did not think about the power it has as a sales pitch. 

Let us not deceive ourselves: one of the strongest factors for the user when deciding on the online purchase is price. Of course, there are other aspects such as convenience, reviews (social proof)...but price is what comes first. 

That is why since years, we have lived surrounded by platforms that are exclusively dedicated to compare products and services such as Next Tag or Price Grabber. Even many eCommerce add their own internal tools (marketplaces like Amazon display it directly in their Buy Box, to the right and under the highlighted purchase button). 

Behind an absolutely strategic decision, a research of product, market, competition, operating costs, production,logistics, acquisition, market segmentation is essential... Doing it well is not easy, but it is worth every minute you spend on it. 

The first thing you should think about is what criteria you will use to define the pricing policy, because there are more than one way of doing so. 

The more accurate you allocate costs, the better things will go later, think of each and every one:

Now you can already think about the margin you wish obtain. The lower costs are, the more options you will have.

 Although also influences supply, demand, competition and brand positioning. In this case, I do not mean organic positioning but strategic in the client´s eyes. Do we transmit exclusivity? Do we have a good price-quality relationship? Do we have an exclusive benefit? As you can imagine, a buyer of organic products is more sensitive to quality, therefore, he will be willing to pay a little more for a product that fits his needs.

It is a different and a bit more aggressive approach. When we talked about a strategy based on the cost we already mentioned  market. You cannot ignore this variable because you are in real trouble. When you define your eCommerce pricing policy from the point of view of the market, you will be taking decisions focusing on what is happening with other eCommerce. 

First, carry out an exhaustive study of competitors´prices and see where you are, are above them? You may have to do some numbers to see if you can be a little more competitive. Are you below? Congratulations, you can raise the price! Each conversion will bring you a greater margin and you will still be below market price if you do it in a progressive and constant way. 

If this is your idea to define an ideal pricing strategy, you can opt to do it manually by checking the main competitors and the product in order to complete a spreadsheet. This work is quite tedious, that never ends because prices are quite dynamic and move depending on many variables that you cannot control. 

The alternative is to use a software like Mindterest. These solutions are solutions are not cheap, but they have a great weight in terms of strategy. You are not only up to date with changes in prices of monitored products, but it also spies on your competitors in terms of their promotions  or stock levels (imagine it si Christmas time, your main competitors have a stock out and they run out of that so wished doll, if you have enough stock then you can improve your revenue a bit).