According to the National Retail Federation, online shopping sales hit the $108.2 billion mark last year. If we go by the analysis of NRF and Shopify, about one-third of shoppers shop in the festive season, that is around Thanksgiving, Black Friday, Christmas and New Year. Holiday shoppers usually know what they want and have a price range set in their minds. They go to shops that offer great value at the best price.
So, as a retailer, are you ready for the festive season?
“A smart retail strategy will help you drive more traffic: more traffic means more sales!”
Retail pricing optimization helps managers figure out the ‘optimal price’ that a buyer is willing to pay for the product. The key is understanding the price perception of the shoppers, accordingly setting a price range that doesn’t compromise on your profit percentage.
Pricing Models that Rule the Market
1. Value-Based Pricing
It focuses on the value (worth) of an object, as perceived by individual customers. In simpler words, a price that is ‘optimal’ for one customer may not be optimal for another.
2. Cost-Based Pricing
Cost-Plus pricing focuses on adding a percentage value or dollar to the product’s projected MRP. The model considers the complexity of services and the additional prices that protect a business man’s revenue. However, if the sales do not go well, the price can be decreased.
3. Rule-Based Pricing
This model focuses on pre-defined rules or script for price changes that determine your business goals.
How to Set the Perfect Price?
The perfect e-commerce price considers the nature of the demand curve, which is based on 2 factors—
1. Low prices injure your revenue.
2. High prices divert your shopper’s attraction in the competitive industry.
These Strategies will help you determine the ideal price range:
- Develop factors or standards for comparing prices set by your competitors.
- Determine the pattern of changing prices.
- Evaluate how a particular price range in the market.
- Find when their inventory runs out of key items.
- Set a specific time and the percentage for the discount.
You can monitor prices in the market using an automated price monitoring system or a tracking tool that collects a competitor’s changing prices and provides apt recommendations. With these, you can easily thrive during the festive season.