“Pricing is actually a pretty simple and straight forward thing. Customers will not pay literally a penny more than the true value of the product.”– Ron Johnson, the former chief executive officer of J. C. Penney New York Time, 2013
That is why pricing matters, not just any figures, it needs to have the right figures. Now imagine what would happen when blend pricing with the biggest online industry, E-commerce?
‘’Global eCommerce retail sales to hit $4.9 trillion by 2021’’, that’s a whopping number to witness in a span of two years but don’t be surprised because it is bound to happen for one reason, selection of the right prices
The E-commerce industry is growing and as you have read above the sales figures isn’t a small number. Pricing, especially the pricing which adds the right value for the solution being sold, can get your e-commerce business to grow better.
Many brands don’t leverage the benefit pricing intelligence consists of. They believe that setting a random price can win their prospects over with sheer luck. Living in a market that changes constantly and is the reason why many prospects choices affect, if the right price isn’t set including this factor, chances are your e-commerce business can witness a downfall.
What do you mean by Pricing intelligence?
Pricing intelligence is the process of monitoring, keeping a closer eye on the market and analyzing the pricing data according to the market requirements so that a brand can improvise or create a better solution.
Pricing intelligence is basically helping you convert the pricing data in hand into a solution that will benefit your business.
For instance say if the market conditions for your solution asks you to increase the prices of your solution and if you have charged a lower price for it, you wouldn't be receiving any profits and above all when your prospects are well aware that if the market conditions are asking a rise in the price and you are selling so low, your product would be faulty.
This act could affect your selling patterns. Pricing intelligence is a great way to acknowledge and understand how pricing matters in your business. With the right pricing intelligence strategies, your e-commerce business can grow better and tackle the tough competition.
For instance, with the right pricing intelligence tactics, you are able to quote a price which will explain the value of the product for itself. So when it is being sold online, your prospects would first compare both the prices which are yours and your competitors and once they analyze that your solution gives the most value they will without a doubt invest in the solution you are offering them.
But how can you decide which pricing intelligence strategies you should opt for?
Top 10 pricing intelligence strategies
1. Competitive Price Monitoring
This isn’t a new word for you.
Competitive price monitoring refers to having a close analysis of what prices your competitors have applied. For instance, if your competitors are selling their solution for a certain amount, you can analyze why they are doing that and understand the value they offer for example if they offer 4 benefits and price the solution a little bit higher, you can analyze and compare your solution such as if your solution offers 6 benefits you could sell it at a reasonable rate which wouldn’t be too less or too more for your prospects to ponder upon.
So when your prospects compare both they would have to go with your solution since you offer more benefits and the price for so much of them is reasonable.
2. Competitive Price Elasticity
What happens here is say if your solution and pricing are great and you are achieving success in the market and amongst your consumers, what happens is because the sales of your solution are getting better, your competitors play a role in adjusting their prices accordingly.
For instance say if you sell your solution for $120 each and are working well with the figure, your competitors could alter their prices and sell their solution for $90 each. This can garner your prospect's attention away from you and explore what your peers have to offer.
Avoid this from happening and ensure that you are always alerted by your competitor's actions such as this and also try setting a price for your solution that even if your competitors are altering theirs, it sounds either too cheap or too expensive from their end.
3. Dynamic Pricing
Dynamic pricing stresses more on the changes taking in the market. The market conditions keep changing for example today your prospects may be paying $100 for your solution but when the next market changes happen they could be either be paying double that amount or lesser than that.
Dynamic pricing refers to making changes and aspects into consideration when setting a price. For instance, you could set your prices higher when the demand for your solution would be high, you could alter your prices for your different types of prospects whom you engage with such as for new prospects you could charge a bit less but then for the existing leads you could increase the prices.
Sometimes the market conditions are such that you would have to change the prices accordingly, so ensure that all these factors are also considered when you set up your next pricing intelligence strategies.
4. Price Intelligence
Another pricing intelligence strategy that you need to take care of is what value that price holds for your brand in the market. Wouldn’t you like to set such a price for your solution in the market it reflects that your brand sells solution at a reasonable rate? This is exactly what pricing intelligence aims to deliver. Ensure that whatever pricing you are setting up, in the market you are able to analyze and receive a pricing insight on the performance of your solution.
When you set a particular price, it is important that you are being perceived as implementing a good strategy. For instance, if you are selling your solution for a lower rate you shouldn’t fall under the cheaper category in the market similarly when you quote your price a bit higher you need to not appear at the very expensive list. Ensure that the price you set brings you under the image of reasonable and worth its categories.
5. Price Optimization
The main agenda for such a pricing intelligence strategy is to cater to the right audience with the right product at the right price and at the right time. Price Optimization depends on the predictions of analysis from prospect behaviour. For instance, say you sell two types of solutions, now the whole year, not all your solutions will be sold equally.
Maybe in the first half of the year, the first solution would have a higher demand and the second half would prefer your second solution. Having an understanding of this helps you to set a price and cater to your prospect's needs during that time. So when you know that your prospects will demand your second solution you tend to start selling them during that time period by pricing the right amount.
When you cater to prospects' needs and sell them a solution that is worth their time and money, conversion rates and sales numbers should be the least of your worries for your business.
6. Rules-Based Pricing
Rules-based pricing is another unique pricing intelligence strategy. What happens here is you will be setting the prices according to some rules or formulas being applied. Martech.zone explains ‘’If competitor’s price drops to X, our price goes to Y, If a product is low on inventory, raise the price to Z.”
Depending on the scenario your prices should be set accordingly. For instance, when your competitors drop a price, you could increase your price by offering an extra benefit which would entice your prospect to be drawn towards what you have to offer. Similarly, when you know that if one of the supplies of your products is less, you increase the prices so that you can sell better.
Incorporating all of this is necessary as it is yet another pricing intelligence strategy to be considered.
7. Smart Dynamic Pricing
This pricing intelligence states that the demand for the solution determines the pricing. For instance, say if a product of yours is garnering more views on your social media handles or is getting better reviews, the price for that solution can be set accordingly. Even if you increase the price of such solutions, there is a valid justification with the reviews, feedback, and notes being considered of that solution.
As mentioned earlier, prospects ponder upon products who would offer better benefits in the solution being sold with a price that justifies what they are receiving. This pricing intelligence strategy is the perfect example of it.
8. Bundle pricing
Bundle pricing is another great example of pricing intelligence strategies. With bundle pricing, the concept is to sell a huge bulk of solutions to your prospects while giving them an idea that they will be investing in multiple solutions at a lower rate instead of having to invest in one solution.
This is a win-win category because such pricing intelligence strategies always work. Understand it in this manner, you are extensively selling your solutions, while you manage to sell most of your solutions, your prospects, on the other hand, benefit from it because they are getting more with a cheaper rate.
9. Captive pricing
Captive pricing is another great strategy for pricing intelligence strategy. What happens here is for your prospects to buy a solution, they need to buy an additional product for it to function. For instance, to access information online, you will need a good number of IP addresses that can help you but for that to happen you will need a proxy server.
This kind of pricing strategy always works because you can earn a good amount of profit since the prospects have to invest in two solutions.
10 . Psychological pricing
This is a pricing intelligence strategy that matters when you decide on pricing. For instance, if you sell your solution for $99, $149 and such types of pricing figures, your prospects will find it cheaper and will be drawn towards buying it, but if you sell it for $100 or $150 your prospect could consider it to be too much and would walk away.
The main agenda here is to understand how the psychology of your prospects such as what makes them choose a solution, what prices draw them closer and much more. When you have the analysis of such information, it becomes easier to use this strategy.
Why pricing intelligence matter in e-commerce sales?
1. Helps to compare prices
Your prospects are not going to land on your page and without any acknowledgment or consideration invest in your solution. Today’s prospects know what they need and exactly how much they need to pay to purchase their needs. The great thing about price intelligence is it lets you decide on the basis of what the pricing data offers you. When you decide on pricing you would consider all the factors such as your profit, market demand, the demand of the product and much more, so when the price is out you will be able to offer your prospects a realistic figure.
So when your prospects start to compare your solution with the competitors, it will be easy for them to make the right decision. When they realize that your solution is realistic and carers to their needs completely, they will without a doubt invest in your brand.
2. Showcases value of your selling solution
Another reason how pricing intelligence affects e-commerce sales is it helps to showcase a product’s value under the right light. For instance, if as mentioned above you sell a product for a very low rate or a higher rate, prospects are going to consider it either too cheap or too expensive hence, setting the right price is necessary. When you conduct pricing intelligence, you are able to set a price which when a prospect analyses, showcases the value the product holds.
As a brand when you are confident that the product you are selling is the right fit for your prospects, then setting the ideal price is exactly what the pricing intelligence process aims to deliver.
3. Fulfills business KPIs
Another reason is to match the set KPIs for any business. For your e-commerce sales to grow you need to completely accomplish what your KPIs are in the first place. For instance, your KPIs could include a set conversion rate, profit or selling rate and when you are able to accomplish all this you are able to indirectly hit a higher sales number for your business.
Pricing intelligence here provides you data that matters and using that data while you frame the ideal price for your solution you are also framing the realistic KPIs accordingly.
4. Differentiates you from the competition
As mentioned earlier, using pricing intelligence is a great way to distinguish your brand from the competition. When your brand stands out, more prospects will be drawn towards you hence impacting your e-commerce sales much better. Using pricing intelligence here is a smart decision because it doesn't let you quote a random price, it lets you sell your solution in a price which highlights the two main things, value, and quality and this is exactly what will push your e-commerce business to succeed better.
How to conduct price intelligence in e-commerce to increase sales?
1. Track the competition
One way to conduct pricing intelligence is to get relevant data and that can help you improvise your current pricing. By just monitoring and keeping an eye on the market wouldn’t be enough you need to frame the right pricing by conducting more actions and one such is keeping a closer eye on how exactly your competitors are going to set their price according to the market. When you are able to do that, it becomes easy to compare and create a better pricing solution.
2. Research other platforms
While you are keeping a close eye on the market, also try conducting your research on platforms that share the market information in the form of opinions, feedback, and recommendations. This action can help you understand the market better and help you undergo a successful pricing intelligence process much more enhanced and ina better way. Pricing is crucial and just monitoring may not be enough, increase your actions to learn more about the market in places where it speaks more about it.
3. Choose the right price intelligence strategies
Another way to conduct pricing intelligence strategies is to implement the pricing intelligence strategies as implemented above. When you decide which strategies fit your e-commerce selling patterns best, you will be able to track the prices of the market with much more clarity. Hence according to the market actions, you will be able to set a price that would convince your prospects to invest in the solution you are selling to them with more confidence.
4. Be updated with the latest trends
The market will keep fluctuating, what prices are trending in the market today will never be the same when you check 5 years from now. To ensure that the right pricing is being framed, always make sure that you are always up to date with the market trends. The more updated you are the better pricing intelligence decisions you can make.
5. Use Quality data
Another way to conduct efficient pricing intelligence strategies is to ensure that you have quality data in hand. Today many profiles one such as data scientists help brands to take the right steps in their business. With the data collected, they are able to make the right predictions which can help a brand to walk confidently in a solution that can capture the attention of their prospects. See it in this way, the more data you are able to capture the better your brand will be able to set the right prices.
The one thing common front he factors you’ve read above is the need for data in every cycle. The online platform does offer a pool of information that can be accessed but did you know that not all the data which is available matters for your business?
Even if you get some quality data, you cannot conduct a copy-paste from that source because your brand will stand a risk of conducting a suspicious activity that can block you. So how can your brand capture data without any fears?
Web scraping might be the solution you are looking for.
How web scraping can help to find the data?
Web scraping is the process of extracting data from any source or website without the need of copy-pasting. Web scraping indulges in scraping any information whether it is long or short within minutes and saves the data in your system in the format you would like to view it in such as CSV files and more.
Web scraping can help to scrape relevant information such as the market conditions, any updates on it, your competitor pricing strategies and also the above factors mentioned so that your pricing intelligence processes help you to increase your e-commerce business sales. Data is important and for the modern business, it plays a vital part in helping to frame the way a solution is being sold by them hence web scraping is considered to be one of the modern solutions which ensure that quality data is being retrieved without any hassles.