In the intricate world of eCommerce, you would think that putting a price tag on your products would be one of the simpler tasks you’d have to perform. While it can be as simple as picking a number and sticking with that, you’re not going to be as high-converting or effective as you could be.
Below are 5 simple pricing strategies to implement in your store to help you close more sales and make happier customers.
Lose a Dollar or Penny to Gain a Sale
You’ve probably seen it thousands of times – $4.99, $999, and other variations of prices that are one figure below a round number. This pricing strategy has been used for decades, but why does it work so well? After all, it’s just a penny or dollar off!
When you price just below a larger figure (particularly one with an extra digit, such as 999 versus 1000), you’re making the price seem lower than it actually is. $1000 is not much different from $999, but because we read from left to right, we put more emphasis on the first number in the price. This means customers are more likely to subconsciously interpret it in the hundreds rather than a thousand, making the deal better in their minds. This is also true when it comes to $899 versus $900 – 8 is less than 9, so it seems like a much better deal at a glance.
Provide Discounts for Bulk or Bundles
Whether you’re selling food, collectibles, or anything in between, people are always looking for discounts when they buy more of something. People may want to try a few flavors of food, get the full set of collectibles, or buy a family set of camping gear, but they don’t want to pay the full price for all of them separately. This is where a well-crafted deal comes in – providing discounts for larger quantities or bundling commonly bought items together at a lower price.
As long as you have good margins on your products, it almost always pays to try to sell as many products as possible – even at a discount. While you may lose a few % off of your profit margins, adding the additional sales from multiple purchases or additional products (bought as part of a bundle) will provide you with more profit than you would have had otherwise – a net win for you, and a better deal for your customers.
When it comes to bundling, Handsome Checkout helps make it easy to create custom funnels for any products in your store. Offer upsells, bundle similar products, and provide order bumps at checkout to help them earn discounts – and more sales for you.
Use Sales Effectively
Everyone loves to feel like they’re getting a deal, and sales are a simple but effective way to instill a fear of missing out (FOMO) into your customers to help drive a purchase. While you can’t leave sale prices up constantly, a well-timed promotion can be a great way to drum up more sales or get rid of extra inventory.
If your prices are constantly lowered, you risk competition price-matching you, effectively nullifying your advantage and requiring you to lower your margins even further if you want to stand out again. Meanwhile, a temporary sale is less threatening to competition and helps motivate buyers to make a purchase before the sale runs out.
Price Up or Down from Competition
Competition in your market can be incredibly frustrating to deal with. Just like you, they’re trying to maximize their profits and outsell the competition, so they’re offering promotions and changing prices frequently. Since you’re competing directly with your competition, you need to be mindful of what they’re charging – and make a decision about how you want to respond to it. There are 2 ways of thinking when it comes to pricing – provide value or demonstrate quality.
The more popular school of thought is to price yourself lower than your competition when possible. Obviously, customers almost always want the lowest price, so being cheaper than your competition is a simple way to try to win them over. However, this can be a slippery slope when you and your competition are actively undercutting each other’s prices. You may reach the point where you’re cutting into your profit margins too much to be worthwhile, so be sure not to go too much lower just for the sake of competition.
A less popular pricing strategy is to price more than your competition purposely, aiming to demonstrate a more deluxe or luxurious offer than the competition. While more money doesn’t always mean better (so exact product duplicates may not be ideal for this strategy), if you’re selling a product that is your own creation or not very popular, consider pricing it up to appeal to a luxurious crowd.
Absorb Shipping Cost into Price
If there’s one thing that’s for certain, it’s that online shoppers HATE paying for shipping. While there’s no confirmed sole reason for the benefits of free shipping, it is believed that customers only expect to pay what is listed in your store’s catalogue. This means that the additional charge from shipping completely changes the perceived value of the product, potentially costing you the sale. And with 36% of people abandoning their carts because of expensive delivery charges, it doesn’t pay to charge shipping.
Instead, consider offering free shipping, but include your expected shipping costs in the retail price of the product. While this will raise your prices, the customer will know exactly what to expect when they get to checkout, so they won’t feel slighted by the extra charge.