eCommerce Pricing Strategy
When it comes to pricing your eCommerce products in a competitive environment you have to be on top of your game and have a strategy.
The strategy will depend on your sector and competition but this is how it worked in the baby products environment.
All else equal the lowest price wins the sale. You will need software that alerts you when you are not matching the lowest price. We would never be the lowest but we would aggressively match the lowest price to stay competitive.
We would also, on a weekly basis, run a check to see if we held any aged stock, by aged stock, anything over 6 months would be subject to a 5% reduction in price and anything over 12 months would be subject to 10% reduction. We would continue with this each week to keep on top of our aged stock.
We would also discontinue anything that either, did not sell or, the margin became too low.
You'll need to work out what "too low" means for you, for us it was, cost of shipping plus 10%.
For some retailers we know they have a much higher threshold if the cost base was higher.
It is imperative that stock is active and moving. Plus, do not forget, you want to move prices aggressively higher if the product is selling too quickly. Imagine your pricing model as a stock exchange. Too many buyers, charge a higher price, not enough sales, charge a lower price.
The key is to be actively moving prices.
For perishable products, like dog food, you are working on much shorter timeframes. We had software that ensured x many sales in x many days, putting the price both up and down depending on if we were under or over this metric.