Pricing is one of the most important assets when it comes to profit and revenue, as companies typically implement pricing strategies after considering multiple factors, these include for example the cost of their products, the market demand, as well as the competitive environment. Their products’ prices will likely impact their business profitability as well as their brand image.
But most importantly, how can you determine the right price for your products and services when setting high prices can stop customers from buying?
No matter what companies are selling, it’s important to set a price that will motivate customers to buy their products, and yet still allow their business to make a profit, for example: You can use market research and price monitoring software to complete a full pricing analysis according to what your competitors are offering. This also means that you can get more insights on the value and the quality that customers perceive in your products, taking into account that it is one of the most important factors influencing a pricing strategy, but how come?
Customers usually believe that companies’ prices reflect the quality of their products. If they promote their products as top quality, and only then, a high range of prices will match their ads branding. On the other hand, the market demand has a major impact over a company pricing strategy. If for example buyers’ demand for certain products doesn’t change as much as it changes in price, then companies can set higher prices, but if the quantity of demand decreases due to a change in price, the company will need to adapt its products’ prices.
Speaking about market demand, there is another important factor to consider when implementing a pricing strategy: high inflation, not only is it a big concern for individuals, retailers, but also for companies, as they need to adjust their prices, and adapt their strategies.
Have control over the stock availability
Competitors’ stock availability is another important factor to keep in mind as it will help companies to set their prices according to what other rivals have to offer. Therefore customers will have to buy products from your catalog and will continue with their purchases without looking at other competitors’ online stores.
Timing is everything: Consider seasonal demand
In addition to that, seasonal demand is also important to consider, for example in summer: when the market demand is high, you can adapt your pricing strategy, provide customers with sales discounts, and maybe provide them with new payment methods.
All in all, we can say that few companies can anticipate the factors influencing their pricing strategies, and also due to the effects of the pandemic, online sellers are being pushed to change, as they will be facing new challenges when it comes to profit.
Name of the Author: Abla Kabbaj