Having a competitive pricing strategy is a key tool in creating a successful and profitable e-commerce business and can be supported by using an e-commerce price monitoring tool.
Implementing a price monitoring strategy is significant to your business because the market could change and you need to ensure that your pricing strategy is optimised in order to retain your customers and sales.
So, why do you need to monitor a pricing strategy? Monitoring your competitor’s pricing strategy and comparing them to your own can greatly increase your chances of conversions and/or sales. This is because you can see trends, beat competitor’s prices and keep your prices relevant to the current market.
In this blog, we will discuss why you need to monitor the pricing strategy, examples of 5 price monitoring strategies, and the importance of pricing.
How important is pricing
Pricing is hugely important in terms of growing a business and generating revenue for your company. Choosing the correct pricing and competitive pricing strategy will determine how successful you are in your market compared to your competitors.
Having a relevant price to your market will attract customers when they are searching around for a product they want, whereas if you have a product or service that is priced completely out of range compared to your competitors, customers are less likely to trust you, nevermind invest in your product.
Furthermore, pricing is also important with regards to building product or service value with your customers. Choosing the correct price for the quality of your product or service will determine whether your customers would return to you for a repeat sale and even recommend you to people they know. Therefore choosing the correct pricing can contribute to your company’s reputation too.
Why do you need to monitor a pricing strategy
The definition of a pricing strategy is a method used to determine the ideal price of your product or service based on competitor analysis. This helps to maximise profits and dominate the market based on competition and consumer demand.
Monitoring your pricing strategy is imperative to remaining dominant in your e-commerce market. This is because, just like you, your competitors will actively be looking for methods to improve their sales through their own pricing strategy and, if they notice a change in the market, that means that their current strategy isn’t working well and they will change it.
Using Price Trakker’s competitor price tracking software will help you to spot trends in the market, opportunities for price changes, and identify alterations in customer demand which can all influence your pricing strategy. It is important to monitor your pricing strategy because a strategy that you implemented a year ago may not be relevant to the marketing a year later, resulting in a reduction in revenue and market share.
For example, you may have implemented a premium pricing strategy a year ago because you were entering a fairly new market with few competitors. This would mean that you could set a standard for the quality of your product through your brand and product, therefore, dominating the luxury market.
However, a year later a new competitor could have entered the market that is selling similar products using a price skimming strategy. This means that initially, they sell at prices similar to yours in order to gain trust from customers, as well as proving the quality of the product and service is equal to yours. After gaining the consumer market’s trust, the competitor may begin to implement a price skimming strategy by reducing their prices gradually, and, before you know it, you are starting to lose revenue.
Using a competitive pricing strategy tool would help your business to preempt this change in the market by analysing the change in your competitor’s prices. This means that you would be able to reevaluate your pricing strategy and adjust it to how consumer demand has changed. Therefore, it is very important to actively monitor both your competitors’ and your own pricing strategies in order to constantly remain dominant within the market.
What are the 5 pricing strategies
There are multiple different pricing strategies that, if optimised, can result in you generating an increased amount of revenue for your e-commerce business and help you to dominate the market by taking the limelight away from your competitors. Using a price monitoring tool will help you analyse your competitors’ pricing and determine the pricing strategy that will be most effective for your business.
Below are the 5 pricing strategies:
- Price skimming
- Penetration pricing
- Value pricing
- Premium pricing
- Loss leading pricing
If you are interested in reading more about these pricing strategies and how they can benefit your business, take a read of our recent blog here.
What is a rip off pricing strategy
The rip off pricing strategy is a method that we recommend all companies avoid in order to keep their customers happy and maintain revenue. A Rip off pricing strategy involves marketing very low-quality products at extremely high price points.
This strategy is a good method for creating a bad company reputation and reducing market share so we would highly recommend not using it as a competitive pricing strategy for your company.
What is the meaning of a price tracker
A price tracker is also known as an e-commerce price monitoring tool and is used to help companies compare prices with the competitors in their industry. It makes it easier for companies to evaluate where they sit in the market and make justified decisions for moving forward including choosing a pricing strategy.
A price monitoring tool also takes the time and stress out of monitoring prices in your market by putting the data all in one place at one time which benefits all companies.
About Price Trakker: PriceTrakker provides one of the best competitor price tracking software in the UK, allowing businesses to stay on top of competitors’ prices and determine the best competitive pricing strategy for them.
For more information on Price Trakker’s service get in touch today.