Wouldn't you have an easy life if you could sell your products and services online for whatever you wanted – and your customers didn't complain at any stage – or go elsewhere? Obviously this might seem like a bit of a fantasy but it's entirely possible to achieve if you're using the right methods of pricing.
You can even charge significantly more than your competitors, and still have customers queuing up to buy your products and services. Sometimes you should compete on every aspect of your business except price!! How is this done? Well, read on...
1. Offer Great Customer Satisfaction
The best way to separate yourself from the competition is through absolutely outstanding customer service. This is the one aspect of a business that customers will rave about if it’s great, and never forgive if it’s terrible.
Online shopping exists because of the high level of convenience, broader selection, competitive pricing, and greater access to information. The rules are ever-changing in online retailing - and consumer buying behaviour is evolving very quickly - but have no doubt that the customer is the most important element in the equation of selling!
Consumers say they like to shop online for: convenience, better prices, variety, easy price comparisons, no crowds, less compulsive shopping, no need to spend on petrol, and discreet purchases.
Price remains a major factor, but many customers state they just want to be treated well. If the consumer can be persuaded of the value of what you sell – and, as a bonus you offer great customer service and return policies, consumers are more willing to pay a premium for their purchases and become loyal to you. Make it your company policy to ensure every single customer receives outstanding service – which should lead to a lasting relationship.
2. Offer the Best Guarantee
Put your customers at ease with a water tight guarantee. As an example, Lakeland offers a 100 percent satisfaction guarantee on every single one of their products, with an unlimited returns policy. Customers are encouraged to return any item they are not completely satisfied with, for any reason. Offering this sort of guarantee shows customers that you are assuming the risk because their satisfaction is your primary concern.
3. Have A Clear Competitive Plan
Your basic plan is the foundation of your very business existence. You’ve got to know what you’re doing and why you’re doing it. You have to have a strategy that clearly represents your objectives and guides your company to positive and profitable results. Use the tools available to help you make the right business decisions in the markets you serve.
Think about your positioning on prices:
Do you want to become known as offering “Every Day Low Pricing” like Primark or as Amazon does? If so, can you compete at lower prices than are already being offered?
Do you want to be known for having moderate to higher prices, then knock them down with frequent promotions and sales?
Do you plan to build on value, service, and niche marketing, which might command higher prices?
Do you wish to make more sales at lower prices (i.e. sell volume) with a lower overall profit rate for each sale? An alternative is to price according to perceptions of how much the consumer is willing to pay, sell a lower volume, but make more sales?
Do you want to utilize a competitive pricing technique called “price discrimination,”where you monitor how the customer reaches you, and maximize profits according to how much you believe they’re able to pay (based on the type of search they make)?
Formulate a game plan for the long haul. Utilize the tools available to gather intelligence regarding pricing, marketing, selling, stock, and so on. A sound plan will keep you on the right track - and also keep you from being drawn into competitions that you can’t win.
4. ALWAYS Price Right
Pricing is crucial with online retailing requiring the creation of a real pricing game plan that incorporates the following elements:
Know when/how to raise prices. Consider price perception and positioning
Avoid leaving money on the table
Practice competitive pricing and marketing intelligence
Monitor pricing and products to know what’s going on in the market
Monitor pricing and products to know what your competition is doing
Don’t make the mistake of thinking that price is what you charge in order to meet your costs.
Manage your pricing. It isn’t just about lower prices, it's about having the right prices
5. Use Pricing Intelligence Software
If clear competitive planning is the foundation of your game plan, pricing intelligence is the key to your ultimate success. In order to price right and gain the upper hand in increasing market share and sales, it's essential to monitor your competition and know the profitability of your products. You need to know what’s happening in the market at any given time so you can use optimal pricing at optimal times.
Pricing intelligence tools help you gain pricing insights, identify comparative price distributions and trends, your competitors’ terms of sale, pricing policies and how they differentiate their products from yours. Pricing intelligence information is current and available 24/7 to help you make critical, strategic short-term decisions, while also fulfilling long-term goals.
6. Use Promotions
Consider promotions as a clever way to reel in new customers: price reductions, specials, free postage, bundling products, bulk buying, price matching, free returns etc. These will keep your customers attentive and, if used carefully and wisely, promotions will hopefully lead to additional sales. Promotions can also get you known, and help toward creating loyalty and trust for you in general.
7. Factors Beyond Your Control
Sometimes there are factors beyond your control that can impact your business and affect you or your sales. You might not be able to do much about them. What is important is to be aware of them, the effect they can have on your business, and then work around them:
Automated pricing systems used by major retailers like Amazon change prices automatically (algorithmically) to stay ahead of any change they detect. These changes are frequent and aggressive.
Comparison shopping engines (CSEs) like Google Product Search. Shopzilla amasses product data from many merchants and matches up products, allowing consumers to compare prices across various stores in seconds. Almost always based on price, when a consumer “clicks” on a particular merchant’s info, the CSE sends the consumer to that website. Smart phones and specialized apps allow the consumer to compare prices anywhere and anytime.That’s why you must have ultra-competitive-pricing and info at the very moment the consumer wants it, especially when they make the buying decision – see Use of Pricing Software above.
8. Use Social Media
Facebook has more than 800 million subscribers worldwide – that's a lot of potential customers!
Social Media provides a platform for online retailers to connect with consumers. Social media is playing a bigger and more positive role in online retailing every day and you need to develop a presence with maximum reach. A bonus is that there's also competitive intelligence to be had from information on social media sites.
As consumers take advantage of all the latest technologies and trends, theonline retailer must have the latest (and best) strategy, tools, tactics, and prices for success. You will need to formulate and follow a great business plan – and monitor your competition’s pricing and products 24/7. Pricing Intelligence Software will help you compete on a level playing field. It's readily available and affordable to help you extract the information you need about your competition and the competitive marketplace. This is essential information to help achieve maximum market penetration and to garner maximum £s for your products - ensuring your long-term success and profitability.
Remember, though that it's not ALL about price - when companies establish themselves with the best service, experience, or guarantee, price can become a secondary consideration. Go above and beyond with your customer service and they will gladly pay any price for the pleasure of doing business with you.
- Pricing Strategy: how to price a product, Bill McFarlane 2012.
- Pricing for Profit:how to develop a powerful pricing strategy for your business, Peter Hill, 2013.
- The Strategy and Tactics of Pricing, Tom Nagle and John Hogan, 2016.
- Pricing with Confidence: 10 ways to stop leaving money on the table, Reed K Holden and Mark Burton, 2014.
- Confessions of the Pricing Man: how price affects everything, Hermann Simon, 2015.
- Value-based pricing:drive sales and boost your bottom line by creating, communicating and capturing customer value, Harry Macdivitt and Mike Wilkinson, 2011.
- Marketing: concepts and strategies, Lyndon Simkin and Sally Dibb, 2016.