Optimal product pricing is an important key goal for all businesses around the world. Simple business rule says that when you price your products optimally, you will generate more profits.
In 2017 we continue to see the trend that more businesses incorporate new data analytics tools for monitoring and combining heterogeneous business data. We prepared a list of product pricing industry trends based on our experience and work with e-commerce retailers. Working with user metrics in mind is one of our core values for creating a tool that is useful for e-commerce owners and product managers and which helps them devise, implement and measure winning pricing strategies.
Top product pricing trends in 2017
The competition in e-commerce is becoming sharper and consumers are more price sensitive than ever before. This is fueled by widespread availability of price monitoring engines enabling easy price comparisons between websites. Branding is often not the most important thing customers value. Consumers compare prices of different brands online and shop directly on e-commerce platforms like Shopify or Booking.com. A quick price comparison is being made every instant and many of buyers simply choose better price points.
Let's look closely on the top product pricing trends for e-retailers that shape 2017 so far.
1. Competitor price monitoring
Calculate best prices in real-time and stay ahead of your competitors. By implementing a price monitoring software you can record historical data of your own shop and compare it with data of your competitors. Competitor price monitoring simply enables you to set right prices for your product by using dynamic pricing. Apply what works for you and stay away from the mistakes of your competitors. You can even implement automatic daily price monitoring and repricing technology and adapt your prices automatically when you are over or under pricing some of the SKUs.
2. Analytics, e.g. Google Analytics
The beauty of using Google Analytics or other visitor analytics data in your pricing strategies is that you don't have to guess trends anymore. You can make decisions based on clear numbers and results. Google analytics is a free tool by Google and it gives you a precise perspective on product conversions and price elasticity. Monitor numbers of users, page sessions or bounce rate regularly. Set conversion goals, integrate a price monitoring software into your workflow and monitor how individual products are selling. You can then work on optimizing your pricing strategies to include selected repricing rules.
Do you have a popular product that sells in hundreds of units and brings a good chunk of money in your sales? Don't forget to monitor its conversions and continuously keep track of competitor prices. You might want to optimize the price after monitoring price changes of your competitors and get even more from your already booming sales.
3. Machine learning
Use machine learning to set prices automatically to improve profit margins. Optimize pricing strategies for products that sell in large quantities and continuously choose the best discounts. Short duration promotions or flash sales can be easily implemented by letting the algorithms pick optimal discounts.
4. Frequent price changes
Airlines, hotels and even Amazon change their prices several times a day. One of the top product pricing trends in 2017 is making frequent price changes. Raw data and user interactions from different sources and databases are being collected. Raw data is used for data mining at a later stage. If you are a large shop with advanced technology infrastructure, you can gain competitive advantage through frequent price changes, as you gain more conversion and behavior data to draw better business insights.
5. Geo targeted pricing
E-commerce has a broad reach and anyone can visit your website. However, consumers visiting from different locations might have different perceptions, thoughts and expectations about product pricing. Local prices do matter. Compete with a geographically targeted optimized price, beat local retailers and win more customers. Monitor local competitors and discover the countries or cities where you are not staying ahead of your competition.
In the era of big data, machine learning and digital tools it it is becoming easier to price products or services efficiently based on your own statistical or historical data. Choose the right goals for your store, e.g. based on the volume of units sold or your geographical location, compete efficiently with other retailers and win more customers.
FutureMargin is a pricing tool for evaluating and driving pricing strategies for ecommerce stores. Using historical sale, visitor and margin data, FutureMargin can be used to improve your e-shop product pricing and profit. Available integrations: Shopify app and API.