Various factors determine the revenue potential of an online store. One of the key factors is pricing strategy utilized by the owner. One should price their products in such a manner that:
A) Buyers don’t see the product as over prized
B) Owner does not incur losses
C) The prize should neither be too less or too high as compared to the market prize
Keeping the above points in mind, there are various strategies which help an owner of the online store to attract customers as well as increase the sales. These strategies are based on the psychology of the buyer and help the seller maximize their sales.
The correct pricing strategy will help the owner determine the price point at which the profit on sales can maximize. Setting the prices of the products is based on wide range of factors such as production costs, distribution costs, market prices and the targeted customer base.
Listed below are some strategies that may help the owner design his own pricing strategy for his online store:
1) Similar products ≠ similar price
Logically one should price two similar products at the same price. But that will not encourage your customers to buy your products. When customers are provided with similar products of similar prices, they tend to refrain from buying. For example, there are two dresses with same fabric and in same color with a minor difference in the style. So, instead of pricing them at the same value, the owner prices them different value. This increases his chances of selling. Some bought the cheaper dress while the other bought the expensive dress. A research has also been conducted on this topic and the result are as such: people are attracted to same products with different prices as this gives them an option to acquire the same product for either the less price or more price.
2) Premium Pricing:
This means pricing your products a little higher than the market price of the similar products. This method is adopted to make the customers believe that the goods offered by you are better than the ones on the market. This is considered ideal for small businesses that are just entering the market and sell unique and different goods. The owner should also put in efforts to make the customers believe that his products are of premium range. He should invest his time and money on the packaging and the images of the products to give a high end look.
3) Magic number NINE:
When a customer plans to buy something, he has a budget in mind. He keeps a number in mind and is ready to be flexible with it but not too much. It is readily observed that when a product is priced at Rs. 99 instead of Rs.100, it is able to attract a lot of customers. The reason being that we read from right to left and by keeping the price at 99 the object is still at the nineties. This method works even better is if the seller shows the reduced price :
Considered as the most effective method by the sellers, this makes the buyer feel as if they are getting a better deal from the buyer. Generally used by flea market vendors, this method is like bargaining. Where the buyer gets the same product for a lesser value. Since the idea cannot work subsequently on the online store, we suggest you to publish an expensive product next to a nominal product; this makes the other product looks affordable.