What do you have to take into consideration when trying to develop an effective online price optimization? It is not the same selling products virtually than selling them physically; that is why it is essential to have a sharp knowledge of these differences so that you can develop a strong pricing strategy.
What is your vertical market?
If you operate in a vertical market, in which your products and your competitors’ do not have many remarkable differences in between, final customers will make its decision influenced basically by the price. In this case, it will be the determining factor so that a client buys in your e-commerce store or your rivals’.
Remember that when defining your pricing rules, you need to take into account critical factors that will have a direct impact on your final price and, consequently, in the profits you make out of it. We are referring to purchasing costs, minimum margins you want to protect for given products or brands in your catalog, as well as other relevant factors like stock status and whether we deal with long-tail items or top-selling ones.
Know your type of product
But still, what do you have to keep in mind? Setting prices is not an easy task. There are so many different possible pricing strategies, so you need to be able to choose the right one. However, the facts which influence your price optimization can directly depend on:
Your product type: Is it a common or very unusual article? You need to take into consideration its flexibility; that means, whether demand tends to fluctuate or is more stable. The utility of the product will tell its own flexibility.
The vertical you operate in: depending on what sector you are working at, prices can change to a greater or lesser extent.
The specific time of the year: The value of certain products may be influenced by the time of the year or specific dates, such as sales time, Black Friday, Christmas,…
The number of competitors: according to the number of competitors, prices can change more rapidly. Since one of them may be leading the price changes and, consequently, the rest of rivals will be changing prices as well.
Speed up your knowledge thanks to process automation
Defining your pricing strategy and set the final prices for each of the products in your catalog is not an easy thing to do. Prices can change several times per day if there are many competitors, and the product is widespread.
That is why the usage of a pricing optimization software is on the rise, precisely to reduce both the investment of time this kind of task would cost and the money you need to spend in human resources.
Also, this price optimizer will help you set truly competitive prices that match accordingly to the current market needs.
A better visualization equals a better comprehension
Once you have automated the pricing optimization process via price intelligence tools or price monitoring solutions, the quantity of data you will have to analyze is going to increase considerably. This sort of platforms provide lots of data on the state of the market, but they do so in an accessible way so that you can make the most of the information provided.
Normally, this sort of solutions count with all kinds of charts and tables through which you will be able to visualize your data much easier. This data will turn into relevant information that will help you understand better the real market situation and draw up a good pricing strategy. A good organization of information is the key to optimize decisions and maximize results.
Thanks to filters and segmentations, you can extract detailed reports, distributed by categories or competitors, and study those factors in order to better define your next and improved strategy.
Monitoring prices to improve customer loyalty
Price intelligence solutions also provide you with a comprehensive view of existing competitors for a given product and how your store ranks among them. This turns out to be a great asset in order to check how competitive your store is being for specific items, and it also enables you to take any actions needed to keep up with market level.
All of this will help you improve your positioning in marketplaces like Amazon or Google Shopping, and along with the data provided, you can make more accurate decisions.
By monitoring prices in the market, you can achieve a more successful and effective pricing strategy, as you will be able to anticipate opportunities or possible threats. The best optimization software should be capable of tracking price history in competitors and enable you to adjust prices accordingly by anticipating rivals’ price moves.
Remember, the greater value you offer at a good price the more willing customers will be to buy from your store and that can lead to users returning to your site to buy more and, thus, a greater degree of customer loyalty.