There are many different techniques an e-commerce store can implement to increase sales. Today we will take a look at one in particular: dynamic pricing solutions.
A proper pricing strategy to improve profitability
Having a properly designed pricing strategy is crucial to enhance the performance of your online store and stand out from the competition as a competitive business inside your vertical.
One of the best ways to optimize your pricing strategy is watching the behaviour of the market you are working in. By watching it, you will collect relevant information about the situation of your rivals’ prices that, doubtlessly, will allow you to improve your pricing strategy and pricing decisions.
When you track every single movement made by direct competition and know the value their products have in the market, you can adjust more competitive prices. Likewise, you can detect whether there is any repeated pattern in your rivals’ prices evolution that can be useful for you to know in the long term. By knowing this, you can anticipate future movements of your rivalry and gain competitiveness.
Price monitoring is useful in so many aspects and, as we already explained, one of them is the collection of continuously updated data from the market. You can use this data to adapt your prices according to the market situation to be more competitive.
Knowing the value the market gives to a specific product helps you make better decisions about the price you have to put to it.
Include Dynamic Pricing to increase sales
Thus, Dynamic Pricing solution is a helpful feature for repricing the products of your online store automatically. Repricing suggestions are made depending on the market situation (from competitors’ monitoring) and according to a set of parameters fixed by the e-commerce store.
Its suggestions have two main goals: to increase sales and improve profitability. To do so, the solution proposes optimal pricing suggestions for your products so that they fit in the reality of your market and allow you to stand out from your vertical.
However, all these suggestions follow some rules or conditions that you should have previously set. For instance, you can define that you want all your products of a certain brand to be 5% cheaper than the goods of a particular rival; or to be 5 euros cheaper, or to be equal to that rival’s products.
Besides, you can do the same by categories, tags or specific groups of products. You have to choose what products you want to include in your dynamic pricing strategy as well as make competitors analysis to find out what rivals you want to work with.
Furthermore, you can also apply a kind of “margin protector” with which you can keep safe a percentage of your profit margin for all your products, no matter what conditions or rules you have applied before. If the suggestions’ value surpasses the protected margin limit, the price will not change, and your profit margin will stay safe.
However, many of these tools do not update prices automatically. They do calculate and offer suggestions regularly, but then you need to confirm whether you accept that suggestion. This is to avoid mistakes and make sure the price displayed is always approved by the pricing department.
To sum up, thanks to extended competitors analysis made through market monitoring tools, you can obtain relevant data that will help you reprice your products. Along with this solution, you can optimize your products according to the market’s situation and your own conditions. This way you will surely improve the profitability of your store!