Setting prices today is not an easy task for retailers. It wasn't so long ago when you could simply hire a secret shopper to see what the competition was up to in your geographical area or browse a few online websites for competitive retail pricing information. Now, your retail competition is global and you have to consider many thousands of online prices in addition to traditional brick-and-mortar pricing.
* Avoid The Wrong Price At All Costs: One of the biggest challenges retailers face in product pricing is dealing with the fear of setting the wrong price. If product pricing is too low, profit margins decline and you risk having consumers think your products are "cheap." On the other hand, when product prices are set too high, a customer simply won't buy because it can be had elsewhere, cheaper. (5 Wizardly Ways To Maximize Profits With Competitive Pricing Intelligence & Competitive Pricing).
Sounds like a careful balancing act, right? When it comes to setting your own retail pricing here are a few good, actionable measures you can take to avoid setting the wrong price:
* Know Your Competitors' Pricing.
The best way to set your own pricing is to learn your competitors' prices. You need automated real-time intelligence-gathering in order to analyze the products other businesses in your market are selling and the price points at which they sell. Competitive pricing analysis is crucial in helping you set your own prices in a competitive retail market.
* Know Your Customers And Their Perception Of You.
How you market your retail business plays a role in your pricing. For this reason you must choose your position and brand marketing carefully. If you promote your Web shop as the cheapest place to buy online, it will be tough to move inventory unless you undercut competitors at every turn.
On the other hand, if consumers believe your business is a luxury shop and you provide value-added services (e.g. exclusive brands and curated product lines) you can set prices in-line-with or above your niche competitors.
Understanding the customer's perception of your business will help ensure you avoid setting the wrong price and optimize profits on every product you sell.
* Expand (Or Reduce) Your Product Lines To Stay Relevant And Competitive
At some point, you may find products are oversaturating the market and trying to effectively compete on pricing is headed towards a pricing war. In this case you may have the right price set but consider if you have the wrong products?
To remain competitive, retailers can leverage assortment Intelligence to not only compare and analyze your assortments against your competitors' but to actually identify products that you should carry to keep customers coming back to you.
Bottom Line: 8 Secrets To Help Retailers Set The Wisest Competitive Retail Prices:
1. Research your competitor's pricing using real-time intelligence-gathering.
2. Analyze what other businesses are offering and at what prices.
3. Review and adjust your own product assortments and inventory.
4. Find the new (niche) products that will bring in new customers
5. Optimize pricing on your niche products.
6. Consider your marketing efforts and position in the market.
7. Understand how customers perceive your brand.
8. Know what your customers are willing to pay and price accordingly.