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Setting the right price is critical in e-commerce, especially when managing product listings across multiple platforms.
Pricing is a psychological tool that can elevate or diminish sales. Therefore, a precise balance is required between the profit margin and the customer’s perception.
Let’s dive into pricing psychology and explore how strategic price-setting can make or break your success.
Why does pricing matter in multichannel listings?
When selling products across several platforms, pricing is more than simply slapping a number on it. Instead, the process deals with varying customer psychology and perception.
Strategic pricing is always an edge over your competitors. Leveraging pricing tactics can influence customer’s perceptions regarding your products.
Note that customers don’t just see price tags, although a price tag can give them an idea of the product's value, quality, and prestige.
A product that is priced too low might be perceived as “cheap” or “low quality”; meanwhile, a price that is too high may scare away price-sensitive buyers.
Leveraging psychological pricing tactics
Psychological tactics and optimized prices are also crucial to beat your competitors.
Charm pricing: Why $9.99 beats $10
It is one of the best results-oriented tricks. A price ending in .99 or .5 looks cheaper than a round number.
$9.99 is only one cent less than $10, which will not affect your profit margin, but customers will perceive it as a better deal.
It triggers the thought of savings, even though the difference is minimal.
This tactic goes the opposite in the case of luxury products, where the round-off figures like $200 or $500 work the best.
Decoy pricing: The power of contextual choices
This technique is used to incline your customers towards a specific product by giving them some other unsuitable options along with a suitable one.
This tactic makes buyers focus on comparing your offers and choosing one instead of comparing your products with those of other competitor stores.
Have you ever noticed stores offering three tiers of prices with varying features, where the middle option seems like the “best value”? That’s how decoy pricing works.
The anchoring effect
It is the cognitive bias where customers irrationally rely heavily on the first piece of information they see, which is, in this case, the initial price.
Mention a higher price (as initial or original price) first, then let your customer know that you’ve highly reduced the price due to any offer or sales season.
This will create a sense of good bargaining in their mind, resulting in higher chances of a sale.
When opting for the anchoring effect, you can also offer free shipping because it simplifies the decision-making process, and customers always go for offers that remove additional costs.
Odd wins the game
Prices that end with any odd number, like 7 or 9, are proven to give better results than even ones. A price like $19.97 seems to be a better deal than a flat $20. It’s another way to target the customer’s subconscious desire for savings.
Scarcity and urgency
Creating a sense of scarcity or urgency triggers the fear of missing out. Tactics like “Limited Stock,” “Offering a time-sensitive discount (e.g., 20% Off for the Next 24 Hours),” or “Only 3 Left” can increase the perceived value of an item and encourage faster purchases.
This tactic gives the best results when applied to your e-commerce website with good traffic.
Reducing pain points with split payments
If you notice that customers aren’t converting because they perceive your prices as too high, you can offer split payments or installment plans to make the purchase seem more affordable.
Dynamic pricing for multichannel listings
Dynamic pricing means adjusting the prices in real-time based on market conditions, competitor pricing, and customer demand of each platform. Like at Amazon, prices fluctuate throughout the day, so you must choose the best multichannel listing management software to handle the dynamic pricing tasks seamlessly.
Changing customer demand and behavior on each platform is also a factor urging the need for dynamic pricing. For instance, a product that makes good sales at $65 on your website might need to be priced at $47 on eBay to attract buyers.
Dynamic pricing tools use AI algorithms to monitor the changing market trends, competitors' pricing, and customer demand and update your prices automatically, helping you remain competitive without any time-consuming manual updates.
Factors affecting pricing strategies across multiple platforms
Setting a good pricing strategy means getting the best profits while maintaining your customer loyalty. Here is a list of 6 factors influencing your pricing strategy.
Platform fees and commissions
Platform fees and commissions are the most influencing factors, especially in the case of multiple platforms. This includes listing fees, transaction/ withdrawal fees, etc. To maintain your profitability, you must have to count these costs.
Supply and demand
The basic principle of economics, supply and demand, highly influence pricing strategy.
If your product is in high demand in the market but has a low supply, you can charge a higher price. On the other hand, if the market has a great supply of that product, you must keep your prices competitive.
Product type and value perception
The type of product you’re selling and how the customer perceives it plays a significant pricing role. Luxury products can demand higher prices even if the production cost isn’t that much, but commodity products usually have low or competitive prices.
Meanwhile, If you have a strong brand identity and good product quality, you can charge more as your brand's perceived value and reputation dominate.
Marketplace-specific pricing rules and demographics
Some platforms have pricing guidelines that are too strict, while others have soft pricing corners.
Ensure that you’re familiar with the pricing policies of each platform so you can adjust your strategy accordingly to avoid any kind of penalties. Also, remember that different platforms cater to different types of customers.
For example, Etsy attracts a niche audience, and the same goes for Poshmark, while Shopify targets a broader audience.
Price sensitivity of customers
Price sensitivity also varies amongst customers. Some may compare prices on different stores or platforms to get the lowest pricing; meanwhile, some may prefer convenience, quality, and value over the pricing.
So, you must analyze customers’ behavior to determine if your prices are suitable for them. Tiered pricing is the best solution to deal with both budget-conscious and premium buyers.
Global markets and currency fluctuations
Pricing becomes even more complex when selling internationally due to factors like currency fluctuations, local taxes, and import duties. What works in one country may not be profitable in the other country.
Testing and optimizing your pricing strategy
A/B testing is a powerful method to find out the best pricing. In this method, you test different price points to see which one drives more sales. This data helps you find the balance between profit maximization and customer satisfaction.
Track KPIs such as conversion rates, average order value, and cart abandonment rates to measure the effectiveness of your pricing strategy.
Analytics tools and customer feedback can also help you design the best strategy.
Pokoknya
Making the right pricing strategy is more than just slapping the numbers over your products. It’s about understanding and then dealing with the customer strategy.
Leveraging psychological tactics, factors affecting the pricing, and results analysis techniques can help you design your brand's best and most optimized strategy across multiple platforms.
A well-thought and well-planned strategy guarantees better sales and an edge over your competitors.
