Pricing Strategies in E-Commerce

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...