Pricing is one of the most crucial components of any business. Your overall pricing strategy helps you determine how much your business will make at the end of the day. Pricing strategy should be one of your core strategies during the early business days as it helps you create a value for your business services. This article looks at the fundamental elements that play a crucial role in your overall pricing strategy. But before we go any further…
Why pricing strategy matters anyway?
For every business, “the numbers” matter the most. Think of it this way, every little thing that you do from the beginning of your business establishment is geared towards getting the stronger numbers for your business. In fact, it would not be wrong to say that every business aims to produce high-quality leads that will generate numerous sales, increasing the overall “numbers” for the company. All digital marketing strategies and techniques aim to offer businesses enhanced online usability that increases the chances of garnering successful “numbers” in terms of sales and profitability.
Pricing strategy matters because the “numbers” matter. Without the proper pricing strategy it is impossible to garner the right value for your products or services to your e-commerce store. The following image shows a quick and effective pricing strategy that can help you devise a pricing strategy for your business requirements.
Types of pricing strategies
There are various forms of pricing strategies that are designed to fulfill specific business requirements. If you are starting out as a newcomer in the industry you will have to take the new product-based pricing or cost-based pricing to cover your costs to achieve a break-even point. On the other hand, if you have an established e-commerce business, then you can opt for competition-based pricing and premium pricing strategies. The following image shows 3 most common types of pricing strategies utilized by established businesses and startups.
The following image shows the classification of different forms of pricing strategies.
Pricing strategy matrix
Pricing strategy matrix is a great way to determine your pricing strategy based on the quality of your products. Peruse below:
Devising your pricing strategy for ecommerce business
We hope by now you have a clear understanding of what pricing strategy is and why it matters for e-commerce businesses. Take into account the following things before setting up a price of your services:
- Make sure that your pricing covers the cost of manufacturing and producing a product. If you are selling services, make sure that your pricing strategy encompasses the time value for a certain service.
- Always remember that the pricing strategy for physical product is greatly different from the pricing strategy of intangible services. Choose your pricing strategy according to your requirements.
- It is ideal to include your online service cost in your pricing. Remember that you are using a domain and a fully functional website that requires time and money for proper maintenance. Your pricing strategy should consider the cost of making a product or service available to the customers.
Strong pricing strategy can help you garner the value your products and services deserve, so do not take your pricing strategy for granted.