Every entrepreneur starts off his business with an aspiration of having as many returns on investments as possible. To do so, you will be required to check all the costs, the current market values, the prices set by your competitors and any other thing that may affect the number of profits you get.
Running an e-commerce business requires as much effort as running a physical store. Actually, you need more effort because, for the physical store, you can strategically locate your store and get people coming to your store. As for an online store, you must create a reason as to why people should buy from you.
The pricing of your products plays a major role in determining how many people will buy from you. You need to set the right price in a way that you neither overprice nor have under-priced. To get the right price you can monitor the prices of your competitors and if they are making sales on these products. You will get to know if a certain product is profitable enough to sell online.
According to research, about 87% of the Americans state the products’ price as a major factor when shopping online. Also, about 86% says that they compare pricing from different suppliers before deciding where to buy.
If your competitors are making a lot of sales on their products, it is recommended that you should consider your prices. Below are some of the steps you should take when monitoring the prices of your competitors.
Ensure that you find the right competitors that have sales proof.
When you conduct price monitoring of your products from competitors, you should focus on your main adversaries. The first step towards finding the right price for your products is to identify the closest competitors so that you do not waste a lot of time going through rivals that don’t matter.
All you need is to make a list of all the potential competitors. This is by checking the brands that you know personally, social media research and also check the brands that use the same set of hashtags and keywords as you.
Then narrow down to the ones that have similar products with the same pricing and they are in the same niche. As your company grows you can look out for more competitors.
Choose a well-thought pricing strategy.
There are various methods that you can use to decide on the right pricing of your products. They include;
Cost-oriented. This is basically calculating the final price by adding your targeted profit margin and the cost of these products. However, if there are other factors, this method of price determination may not be accurate.
Price based on the market value. This is basically based on the price of the competitors. This would be great if you have an advantage on the costs of the products.
Pricing based on consumers. This is looking at how much people are willing to pay regardless of the product costs. This strategy is best suited for the creative industries.
In many circumstances, you will be using a combination of these pricing strategies.
Consider e-commerce trends.
Your timing has a great impact on the pricing that you set. When looking at the e-commerce trends, you want to look at what your competitors are doing as well as your own store. You can look at the analytics to know the products that have more traffic and at what time and day of the week. Through this analytics, you can plan on when to plan your sales and/or discount prices.