Competitive Pricing: Are Your Products Priced Too High?
To determine whether or not your items are priced too high, do the same thing your potential customers are doing- search the web and compare costs. According to a 2006 Yahoo!/OMD study that polled more than 4,500 online families, two thirds (66 percent) use the Internet to research products and 64 percent use a search engine every day.
Take a product you sell, perhaps one you’d like to sell more of, and compare its cost against others. An exact search with price or compare prices after the product name may help to pull up the best results (example: [tickle me Elmo] compare prices). It may take awhile to sort out all of the results, depending on the items you sell and how saturated the market is, but it may give you some much needed insight into your business and what you are up against.
Here are a few ways to differentiate your products from the competition in order to convince the customer to buy from your site.
1. Lower Your Costs.
Find the lowest price for the item you sell and ask yourself if your cost could be lower. If so, your item could quickly become “the lowest price on the web!” The lowered cost should help increase purchases made at your site, making up the difference for the price cut.
2. Guarantee a Price Match.
Assure the customer that you will match any price and that you will not be undersold. Chances are the competition is still gaining a profit at their cost, so you should be able to afford the price match. You’ve conquered half of the battle in getting the customer to visit your site. Now that they are there, make them follow through with a purchase.
3. Offer Free Shipping.
If your item costs more than the competition, offer an incentive to your customers. Free shipping is always an added bonus to purchasers. Those two words can make a huge difference in whether or not you make the sale. If your product costs more than the competitor’s, free shipping may give your product the lowest cost at checkout.
A lost sale often results from a customer not being convinced that the product is worth the cost. Convince the customer that your products are worth it and why they should buy from you, rather than your competitor. If you can’t afford to make any price changes, don’t worry. Cost is not the only factor that influences purchases. Nevertheless, a lower cost or similar incentive may give you just the edge you need to rise above the competition!
-Stacie Leonard, Ecommerce Marketing/Copywriting
October 13th, 2006 at 04:56pm
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4 Comments Add your own
1. air purifier | September 5th, 2007 at 1:42 pm
The suggestion is good and useful. We are selling higher price air purifier on http://www.purifieron.com (powered by volusion)
2. Rich Badaracco | October 13th, 2007 at 7:12 am
I agree that the price needs to be competitive but doesn’t this just create a never ending spiral of price cuts? Eventually the margins are so thin that you’re selling products for the fun of it. A couple of my lines are available cheaper than I can buy them from my supplier and offered with free shipping. I think sometimes we shoot ourselves in the foot by taking this type of approach. The only winners are the merchants that can afford to buy in sufficient volume to get substantial price breaks from the manufacturers. Just my two cents which I’m discounting today only.
(Very funny “two cents” comment Rich, good one! In regards to pricing- it’s nice to adjust your prices to be competitive, but it should be reconsidered if it prevents you from making a profit. A good rule of thumb would be to research competitor prices versus what you will be purchasing the items for from the manufacturer, before choosing to sale the item on your own site. Then you can see whether or not the cost will give you a product you can be competitive with, while still making a profit. Also, examine all of your products to see which ones you may be able to offer a lower price on, and then advertise those items. Unfortunately, the merchants that are buying in bulk and getting price breaks are giving the customer what they’re often looking for- the cheapest price. If you can’t offer the cheapest price, examine what makes purchasing from your store better than your cheaper competitors and try to push those benefits instead (quick delivery, a guarantee, free shipping, etc). We try to encourage merchants to offer niche products, those that are unique and do not have a large amount of competition. However, if your products are similar to many other merchants, you really have to think about what makes your offer stand out from your competitors.)
3. Joe | November 29th, 2007 at 11:35 am
Remember the “Loss Leader” concept. Consider lowering prices on items that are easily comparable and making up the difference on items unique to your store. Or make the low price contigent on purchasing with a higher margin piece. For example: “Bed for $399 with purchase of two nightstands.”
Happy Selling! http://www.tampafurniture.com
4. C. Chandler | February 5th, 2008 at 11:44 am
It really depends on how much materials cost for production and more than likely the more quality materials and andvanced techniques that are used make the prices a little more expensive, but I would think customers would rather purchase something once every two years or so than continously have to order the same cheaper imitation 4 or 5 times during the year and spend a lot more.
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