It’s not too much of a stretch to say that getting your pricing strategy right could be one of the deciding factors in how successful – or not – your online business is.
Online shoppers are looking for quality products, reliable deliveries, and most of all – great value. By providing excellent value while not damaging your own profit margins – and getting the balance right between the two – you’ll be well placed to succeed. It’s all about how you position yourself against your main competitors at key points in the year; the run up to Christmas is certainly one of them.
So what is the key to getting your repricing strategy right? Well, this blog will get you thinking about some of the important considerations.
First, knowledge is power, so make sure you’re armed with information about your inventory’s past performance, and notably any seasonal trends. From here, you’ll be able to see how your products have performed previously and what to expect next time, or where to focus your efforts to make improvements.
Next up, you ought to segment your inventory so you’re repricing the right items at the right time. You should also track your item costs so you’re never selling an item at a loss – this may be tricky to do manually if you have a large inventory; there is software available to help you deal with this – more details of which, later in the blog.
It can also be easy to overlook the importance of – and the fluctuations in – shipping costs and currency markets. These can really make a difference to how much you’re paying, and can affect your bottom line if you haven’t considered these. Currency exchange companies like World First can help with a strategy to protect you from adverse exchange rate movements.
Be aware that putting an effective repricing strategy will take time and a lot of tweaks and adjustments – reviewing the results will also be a time consuming business, but it will be worth it when you have a fully-fledged repricing plan and a formula you can replicate time and time again.
So how do these strategies work in practice? Well, we mentioned seasonal trends before – the most obvious way of illustrating this is to say that you probably wouldn’t be selling Holiday decorations for the same price in May as you would in December. In December, there are lots of people looking for Holiday decorations – but at the same time, that also raises the competition levels. This all has to come into your thinking.
Have your products received some great press lately, or been the subject of an all-important positive review from a top reviewer? If so, you’re well within your rights to put the price up, as consumers will be more likely to pay more for it.
Consider your FBA storage fees. If these are about to go up for certain products, put the prices on these products down. And think generally about how your profits could be hit should your arrangement with Amazon change.
Now it’s time to think again about your competition. Say you’re selling a product that ten competitors are also selling, but you’ve also got a product that only you stock. Both cost the same and the margins are the same, so what do you do? Well, it makes sense to be more competitive with the prices on those products that have more competition. Have the best price, and you may well get the sale.
You may be reading all of this thinking that there’s too much to do to put a repricing strategy in place, particularly if your inventory is sizeable. You might be pleased to hear that for Amazon sellers, repricing software lets you automatically compare the prices of your products with those of your competitors. It means your products can be competitively priced so as not to encourage customers to choose a rival’s product rather than yours. The better the prices, the higher it appears in searches – and you could even find your product in the coveted buy box.
Repricing software does all this without you having to lift a finger, so you don’t have to painstakingly change the prices on all your products manually. Just imagine how long that could take…
Whether you’re a big or small business, and whether you go down the automatic or the manual route, getting your pricing strategy right could make all the difference when it comes to your bottom line.