The Price Strategy
Retailers use a variety of price strategies when offering products and services. Prices can be set to maximize profitability, to beat specific competitors or even to always be the lowest price on the market to attract attention. It can also be used to defend against new stores entering the game, by underselling them. Every store owner is faced with deciding on implementing the correprice strategy.
So what do we do at PriceMole?
Here is our quick guide to Price Strategies:
1. WHAT IS YOUR GOAL?
As a store owner, you have a goal - whether it be to ramp up productivity, reduce wasted time and expenses, increase traffic and sales, add more products to your catalog, change your prices to be more competitive, etc.
Every goal considers a different approach to how your products perform on the market. Pricing is a vital part of reaching said goal.
Using the right price strategy lets you accomplish these goals. If you start with a simple strategy and reach one goal, you can start adding more strategies on various products to achieve other goals such as boosting revenue, improving your margins, penetrating the market, etc.
With modern technology and automated price strategies the number of goals you can reach are infinite.
2. WHAT IS MY IDEAL PRICE STRATEGY?
Once your goals are set, you can take a look at your dynamic pricing approach and create a price strategy that will help you reach your goal quickly and with ease.
Price Strategies are commonly used for repricing, and different goals need different defined rules to accomplish said goals. Let us look at some examples:
Draw Attention to my store: The best way to get started is to reduce prices. The automated price strategy can set all of your products to sell at a lower rate than your competitors or even match your cheapest competitor. This lets people know you are in the game and where there are great deals, there will always be sales.
Improve your Margin: Here you need a few price strategies to balances sales across your store. Usually, you would keep your best selling products matching or underselling your cheapest competitor - so people see your great deals. Surrounding products would use a strategic price increase to ensure an improvement of margin without scaring the customer away.
Maximize Profits: This is an aggressive price strategy where you price both noticeably lower and higher than your competitors. With PriceMole our algorithm price strategy considers market trends, prices of previous years, psychological pricing and more to recommend the best price to boost profits.
3. WHO AM I COMPARING MYSELF TO?
When you track your competitors' prices, it is vital to know that they are selling the same products and they are selling in the same markets.Making sure that you are not tracking wholesale sellers can keep you from a world of headaches.
The data for price tracking and ultimately automated repricing with price strategies have to be clean, or the result will be corrupted.
4. HOW MUCH TIME ARE YOU WASTING?
Many retailers since the early 1950s and still today employ people to check their competitors' prices on the regular to make sure they are always competitive. Then hours are spent repricing and calculating new margins.
With new technologies and automation, you can start repricing without friction. Price Strategies completely automate the dynamic pricing game.
The goal of a dynamic price strategy is to automate the repricing process without human error or waste of time to bring you to the goal you had set at the beginning of this guide.
With tools like PriceMole, you can let it take over and give you a hands-off approach to price strategies and repricing.
5. ARE PRICE STRATEGIES SAFE?
What happens if some unwanted data slips into the tracking and repricing process and my automated price strategy sets an adverse price?
With dynamic pricing strategies, it’s great to set up some safety nets that let you use price strategies with ease.
- - Ensuring all your costs have a cost set so that your price never drops below your value/cost
- - Ensuring your price strategy definition is set to reach the goal you have in mind
- - Ensuring any errors are resolved before repricing
You can sit back and relax as the automated price strategies run.
LOOK BACK: PRICEMOLE PRICE STRATEGY 2018
In December 2018 we reviewed the usage of PriceMole SmartPrice (our machine learning powered dynamic pricing strategy) and other automated price strategies used by our customers. The results showed that when you consider your cost, your competitor's prices, price trends in the market and psychological pricing to recommend the most profitable price available, the average user saw an increase of 13% to 22% profit using a SmartPrice strategy over a conventional "beat lowest competitor" strategy. The "match my cheapest" or "beat my cheapest competitor" strategy did lead to an increase of 12% in traffic to the average user intoducing additional sales and new repeat customers.
As mentioned above, once you reach that first object, the possibilities of achieving all of your other goals with the right price strategy are immense. Watch your revenue grow, save time with automated repricing and be sure to beat your competitors!
PriceMole is Shopify's #1 Competitor Price Tracking and Dynamic Pricing Tool! PriceMole is the ultimate competitor price monitoring and price tracking solution for eCommerce. PriceMole monitors your competitor’s or suppliers prices and stock levels and lets you automate your response with pricing strategies and dynamic pricing.
Contact Us for more details!