Imagine a world where you were always able to command competitive prices for your products and still make a profit. That world is well within your reach if you start implementing smart pricing tactics. They help you stop undercutting your prices to achieve a competitive advantage.
Estimated reading time: 4 minutes
We’re going to look at a number of ways you can implement smart pricing to your ecommerce store to gain competitive advantage and increase your profits at the same time.
What is ecommerce smart pricing?
Smart pricing is a strategy where you set dynamic pricing rules based on changing market conditions.
It includes monitoring competitor prices and frequently adjusting prices against competitors to offer competitive deals while protecting your profit margins.
Ease of setting these rules enables online retailers to test different prices on a daily basis. As a result, decision-makers allocate their resources to sophisticated decision making instead of manually testing different price points.
What’s the use of testing so many price points?
Reach targeted profit margins even when you’re competitive
Most ecommerce store owners dream of being the most competitive in their particular market. But usually, being competitive is mistaken for a race-to-the-bottom strategy, and therefore, profits are low.
Just because you aim to be competitive, doesn’t mean you have to be the cheapest and lose out on profits.
Take this store as an example.
Yes, this price will attract so many new customers and it can even build hype around this store. But an £80 difference from the closest competitor has two uncanny consequences.
First, it’s too much to leave on the table. If they sold it for £270, it would still attract many consumers. Why give up on £70 per unit?
Second, in our subconscious minds, there is a strong relationship between price and quality. Even if we love the cheapest deals, we don’t expect an £80 difference. It makes us doubt the quality of the…
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