Doing things the old way is safe, and you don’t have to worry about garnering unfavorable results.
But the safe road isn’t always the right road, especially when it comes to pricing strategies for online retailers. Here’s why:
The Amazon example
Imagine if Bezos decided selling books online out of his garage was too much of a risk. What if Steve Jobs simply embraced computers as impersonal machines?
Those who take risks are remembered as innovators, and those who don’t rarely make an impact.
Innovation, no matter how big or small, is one of the most important aspects of being a good retailer.
And with innovation comes risks. You don’t have as much to lose as Jobs or Bezos, but the potential impact it can have on your bottom line is definitely worth considering.
Offering personalized discounts and improving your overall price perceptions to get ahead are great ways to improve your ecommerce presence and make a customer’s purchase decision easier.
These small changes may not be as drastic as creating an entirely new industry, but they can have a huge impact on your store’s success.
Odd-even pricing, often known as “charm” pricing, is the strategy retailers use to make their prices more appealing to the human psyche.
You’ve probably seen it before, when prices end in or include several nines? That’s far more appealing to shoppers than an even price.
While whole number pricing might be better for antiques and luxury items, charm pricing works especially well for commodity products.
Charm pricing is a no brainer for online retailers. Items that use charm pricing see a 24% increase in sales compared to their counterparts with other prices.
But why are nines so attractive to us? No offense to nine, but the attraction doesn’t lie within the digit itself.
When you see a price that says $29.99, you automatically think of it as lower than $30, even though it’s just a penny under.
The whole number draws the price down and places it in the cheaper $20 range instead of $30.
Product bundling is a great way to not only improve sales, but to improve average order values as well.
When you sell items that are often complementary to each other (like peanut butter and jelly), you can bundle them together and sell two products as one.
In order to do this successfully, you have to make the final price less than it would be if the products were purchased separately as an incentive.
Product bundling is a great way to make the price point for many elastic products much sweeter for consumers, while moving more inventory.
You don’t have a ton of flexibility for these products’ prices, so taking advantage of a hack like bundling can do wonders for your business and make a stiff price point more flexible.
Retargeting abandoned carts
Shoppers are rarely married to a purchase decision early in their shopping process. Because of this, many leave your site without making a purchase.
This often translates into an overwhelmingly high cart abandonment rate for online retailers.
But these abandoned carts aren’t doomed to a cart graveyard forever.They can actually be resurrected with the help of discounts through retargeting.
The first form of retargeting can appear in an advertisement that follows the shopper once they leave your site.
What you do with these ads is crucial to bringing the shopper back to your store. Include a discount code to reduce the price of the overall transaction slightly, incentivizing the customer to return to your store.
Another way to offer a discount code is to email the person who abandoned the cart if they have purchased from you before.
Historical customer data can provide you with their browsing history, and turn an abandoned cart into a conversion.
This personalization allows you to reap the benefits of discounts without hurting your overall brand image.
Dynamic pricing is the ultimate makeover for your store’s pricing strategy.
It gives you the ability to flex your pricing muscles in more ways than one. Your prices will be more flexible and have the ability to change in accordance with changes in your surrounding market.
This will make sure your prices are always attractive to your shoppers.
Dynamic pricing can boost your margins and your sales alike. It can improve your store’s price perception while boosting your margins simultaneously.
Unlike these other hacks, dynamic pricing takes a little more work with price testing and report analyses. But the improvement will be seen in the numbers of these reports.
With improved margins and sales, adopting a dynamic pricing strategy is a low risk high reward hack for retailers of all sizes.
Hacking your pricing strategy can be a little intimidating at first, but it’s necessary for the success of your store. Price still matters to shoppers, and these hacks can win them over big time.
For more on this topic, read: How repricing helps level the ecommerce playing field.