6 Reasons Why Your Ecommerce Pricing Strategy Isn’t Working

6 Reasons Why Your Ecommerce Pricing Strategy Isn’t Working

May 11, 2023

Pricing strategy is a crucial aspect of any business, regardless of the industry or product. However, many businesses make mistakes when searching for the perfect pricing strategy to increase profits.

The competitive nature of ecommerce makes it even more important to optimize pricing strategies. To stay ahead, businesses must identify necessary changes and implement them proactively.

In this post, we will discuss common, yet often unseen, reasons why pricing strategies fail.

Estimated reading time: 5 minutes

Table of contents

  1. Setting prices based solely on cost
  2. Not offering product variant prices on different product options
  3. Bad timing
  4. Utilizing a pricing model that is excessively simplistic
  5. Inaccurate competitive pricing data
  6. Changing prices uniformly
  7. Pricing strategy in the age of automation
  8. Wrapping up

1. Setting prices based solely on cost

Regarding pricing, cost is essential, but it shouldn’t be the only factor. Online retailers should also take into account sales data and customer feedback to determine the perceived value of their products. By understanding the elasticity of their products and brand value, they can strategically set prices to maximize profits.

Price vs Cost - pricing strategy

2. Not offering product variant prices on different product options

In today’s market, consumers have many choices when it comes to shopping. Therefore, retailers should offer a variety of price points for different versions of their products, including options for colors, fabrics, and customizations. They should also provide different choices for shipping and delivery during the checkout process. 

product variant pricing strategy

Customizing the product and delivery options can enhance the customer experience and make them feel more involved in their purchases. This, in turn, can increase customer loyalty and improve the perception of the brand. 

In addition, offering dynamic prices can lead to more profits because some customers are willing to pay more for premium options. In contrast, others are satisfied with a standard purchase and may want to pay only what is necessary for additional features.

3. Bad Timing

If you want to increase sales through promotions, timing is crucial. To maximize the impact of your campaigns, you should review past promotions that were successful and determine when they were executed. This will help you plan future campaigns and anticipate consumer behavior, which will inform your pricing strategy.

By analyzing and learning from past promotions, you can predict future outcomes. To create more effective promotions that are delivered at the right time, aim to improve upon previous successes. Additionally, it’s important to keep a close eye on your competitors’ strategies and updates to ensure that your efforts remain competitive.

4. Utilizing a pricing model that is excessively simplistic

There are numerous factors that can affect pricing, including seasonal shifts, competitor pricing, and other variables. It’s important to note that these factors can differ depending on the product. Testing prices to evaluate how changes impact demand is a crucial step to take. When dealing with price-sensitive products, caution is essential when making price adjustments. However, you can also identify opportunities to increase prices without affecting demand. 

It’s vital to run price tests to understand how changes in price impact demand. Handling price-sensitive products with care is crucial, but there might be other opportunities to raise prices without affecting the market. By conducting thorough tests and analyses, you can ensure maximum sales and margins while also finding the optimal price point that consumers are willing to pay.

 5. Inaccurate competitive pricing data

Do you keep a close eye on what your competitors are doing? It’s essential to stay informed about their pricing strategies, as retailers frequently adjust their prices. If you fall behind in monitoring these changes, you could miss out on potential opportunities to increase your profits.

Manual data collection can be prone to human error, which can cause problems. Additionally, it can take up a lot of your valuable time. By automating the process of collecting data, you can avoid these issues and stay up-to-date with your competitors.

6. Changing prices uniformly

Pricing strategies vary depending on the product or category, as each has its own price elasticity. While a competitor’s price change may affect demand for some products, this is not always the case. Competitive pricing is crucial, but it is not the only factor to consider. 

Sometimes, matching a competitor’s low price is not the best option. In fact, there may be opportunities to increase prices. Take Amazon as an example. They do not always have the lowest prices. They may offer some products or categories at a loss, but they compensate for this by earning more in other areas.

You need to track your marketplace and competitors frequently to have accurate pricing data. Since ecommerce is very competitive, keeping your pricing strategy fresh and in sync with your business goal is good and effective.

Pricing strategy in the age of automation

Ensuring that your pricing strategy is based on data is crucial for success. Price optimization is an ongoing process that requires adjustments over time. By identifying the root causes of any issues and implementing appropriate solutions, you can gain an edge over your competitors.

A proactive, data-driven approach to pricing will keep you ahead of the game. Pricing automation is a growing trend and is proving to be an effective tool for optimizing profitable prices in ecommerce.

Wrapping Up

The topic of pricing strategy in the age of automation is one that has been on the minds of many business owners and managers in order to make working pricing decisions. 

As technology continues to advance, it’s important to consider how it can be used to optimize pricing and increase profitability. By taking the time to analyze data and leverage automation tools, businesses can make more informed pricing decisions that benefit both the company and its customers. It’s a delicate balance, but one that can ultimately lead to long-term success.


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