on 22 Apr, 2015.
Throughout our experience, we have seen the importance of finding the right price for our clients. Contrary to popular belief, just because you retail online, the right price isn’t necessarily the lowest price. Sometimes, quite the opposite.
Although online retail is undeniably a price-competitive space, as a retailer you have to figure out how to keep your customers without sacrificing your margins. But, can you even take this a step further? Can you even entertain the thoughts that it might be possible to increase your margins?
Have a read of the quick points below, and see where you stand:
Every action has a reaction. Increase the price, and you need to make another change to keep the balance. This needs to be done by adding value.
A great way of doing this is through customer service. Studies have shown that as many as 81% of customers would pay a premium for better customer service. That’s a big number.
Other add-on’s such as free shipping can make the customer feel like they’re only paying for the product, and if your price has been increased anyway you should be safeguarded against the extra cost.
Another great way to give something back to the customer and sweeten the deal for yourself is to create bundles.
Often you need suitable products to do this, but if you can give the customer a better deal by adding in some complementary products you have greater control over the margin, as the customer is not concerned with the prices of the individual products.
In fact, studies have shown that customers prefer to buy the bundle in comparison to the individual products, so it’s actually good so give them both options, as they are more likely to opt for the bundle.
This is basic economics, but fast moving products are likely to be less price sensitive, therefore this is generally a good area to increase your margins. Give this a quick test to see how your consumers react.
This can also work the other way, and you can offer volume discount to reward your loyal customers, ensuring that you make margin form individual transactions and ongoing value from customers who feel like you have reciprocated their attentions.
This is the tip of the iceberg, there are many ways to be creative and agile with your pricing, but the moral of the story is that e-tail does not have to be low margin high volume. There are various things you can experiment with such as exclusive deals for certain customers, daily deals, time sensitive offers and quantity dependant pricing.
This should all be experimented with on a daily basis, with the approach of testing, measuring, refining and repeating. Executed intelligently this should mean that you can increase your margin and your customer base at the same time.