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Date Submitted: 06/25/2016 10:13 PM
Pricing Strategies in E-Business
by Kate McFarlin, Demand Media
Selling products online requires several different marketing strategies. One important point that is often overlooked
in online marketing is pricing strategy. While it may seem simple to set a price for an item, several consumer
psychology factors come into play. The price point you set for your item may even determine how successfully it
sells.
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Competitive Pricing
Paying attention to what your competitors charge for a similar product or service is vital in e-business. It is all too
easy for your customers to search and find a lower price. If you want to succeed, you may need to undercut your
competition, particularly at first, until you become more established. While this may narrow your profit margin, you
can often make up the difference by selling more than you would have if your prices were higher.
Odd Numbers
Another common pricing strategy for e-business is using odd numbers in a price. For example, instead of selling a
product for $199, you would sell it for $197. This increases the perception of saving for a customer. It's not quite
$200, so in her mind, she is saving extra money. Most businesses utilize even pricing schedules or drop off that
extra dollar to bring it down under a set amount. By taking it down a little further, you can entice more customers.
Related Reading: Pricing Strategy Analysis
Quality and Value
While competitive pricing is important, it is also vital to make sure that the perceived value of your product is not
low. If you are offering too much for too little money, your customers may perceive this as meaning that your product
is not valuable. In...