One of the best business practices is knowing all the top tips and tricks. The next best business strategy is to use the ones your competitors don’t know about so you can exploit their weaknesses and ignorance. As always, RepricerExpress wants to see our readers get ahead, so here are five strategies you should be using.
1. Increase Singles and Decrease Bundles
Let’s say you’re a parent looking to buy your kid a PS4. The console on its own is pretty useless because it’s in need of a game. But when you look at games, you notice how expensive they are — even though one can’t be enjoyed without the other.
One extremely effective pricing strategy is to highlight this fact, bundle two like-minded products together, reduce the bundled price, and point out the savings. Buyers are far likelier to pick up the bundle if they can save a percentage on each one, rather than buy them individually and pay full price.
You can also safeguard against buyers not buying the bundles by slightly raising the individual prices. This strategy should be used sparingly, and not as an end-point goal to increase your sales. You should primarily focus on the bundled product’s lesser price.
2. Let Buyers Set Their Prices
In 2007, Radiohead released their In Rainbows album by setting a pay-what-you-want price. They ended up earning more money from the digital sales of that album than the total digital sales of all their other albums combined, selling more than 100,000 copies of the discbox and taking in an instant £3 million from it. Not too shabby when the entire music industry had been suffering decreased profit in the years following Napster.
We’re not suggesting you apply this strategy to your entire inventory, but rather to certain items such as products that have been sitting around a while or ones that have been super slow to move. There’s the risk that you may end up losing money on this, but think of it from a buzz perspective: the attention you’ll get will draw plenty of traffic to your site, possibly far better than any marketing or advertising strategy you would pay money to implement.
3. Research the Psychological Effect of Certain Numbers
Think of two identical products, like a bottle of water, but one is priced £2 and the other is priced £1.99. Which one seems like the better deal? They’re essentially the same and saving 1p is not really any savings at all, but it feels like that to the buyer.
Odd numbers like 5, 7 and 9 have been shown to psychologically induce a decreased feeling of loss for buyers, making them feel like they’re getting a better deal (even if they’re not).
4. Show the Difference in Prices
The above ecommerce pricing strategy is an excellent one, but there’s a way to make it even more powerful: anchor pricing. This is when you highlight the contrast in two prices by featuring the higher one as the old one, and capitalises on a buyer’s spending impulses to scoop up the deal.
A variation on this strategy is to place an expensive item beside a cheaper one, with the latter being the one you’re actually intending to really push. Buyers will see the difference in price and think that the cheaper one is an even better deal.
5. Try out Flat Pricing
This pricing strategy is most often seen in dollar stores, where just about every item costs the same. If your inventory consists of products that are very similar in price, this can be a fantastic strategy to use. It makes it easier on the buyers, it makes it easier on you in terms of management, and it can result in a greater profit if you can set the price to be slightly higher than the median.
If you’re not comfortable adopting this strategy 100%, try it out as a temporary promotion, like for a day or a week. As in the case of Radiohead, the buzz and future sales you get from it can exceed any temporary loss in profit.
One ecommerce pricing strategy you should always be using is repricing, with a heavy-hitter like RepricerExpress acting as your foot soldier. We’ll do all the heavy lifting so you can continue to draw out effective battle plans, and all you have to do is sign up for your 15-day free trial.