Have you thought about implementing a price optimization software, yet aren’t sure how your Shopify store will benefit?
The investment into a price optimization solution can be a significant one, thus you have to be sure that you're doing the right thing.
It's not only about the decision on which pricing solution to buy, but mostly about knowing how to implement it and use it for your day to day business.
We would like to share some insights and show you, how you can benefit from automatic pricing software and how to use conversion analytics for your competitive advantage.
Let's start from the beginning.
What is price optimization and why do we need it?
It is standard practice that every business owner or retail product manager wants to sell large quantities of products while still making a profit. Ultimately, it is the consumer who purchases the product or service, and who decides which price point is fair.
To manage the process of finding a sweet spot for the products price, price analytics solution can help. It will allow you to determine the proper retail value of a consumer product or service. The core aim of price optimization is finding the right balance between profit and sales.
Because costs constantly change, price optimization is a never-ending task. Evaluating a price optimization strategy manually and deciding on your pricing opportunities or seasonal discounts can be time consuming. By approaching pricing in a systematic way, you free up your time for other tasks.
What can a price optimization software do for your Shopify store?
Price optimization software helps you drive business decisions in a more accurate and systematic way.
When a price optimization solution is used, it will use historical data to recommend optimal prices for products or services. It will help you price hundreds or thousands of SKUs, evaluate and quantify pricing strategies, discover price increase opportunities and optimize profit per visit for individual SKUs or categories.
Standard components of price optimization solutions are data analytics (using accumulated historical behaviour and product pricing performance), competitive pricing analysis and dynamic pricing.
Get the best out of your price optimization software
We believe in user friendly and smart solutions, especially when dealing with online stores that have many SKUs. When we designed FutureMargin, we focused on three features for a successful pricing approach: comparison, tests and evaluation.
FutureMargin solution was designed to help you with the following business decisions and tasks:
- Compare product conversions and analyze conversion graphs
- Find out which price is the best for your business
- Test and evaluate pricing strategies for maximum profitability
- Base your business decisions on up-to-date data
- Adjust pricing strategies to achieve desired metrics: profit, revenue or number of units sold
- Manage your seasonal or discount pricing strategies
- Run price experiments for top selling products or categories
- Monitor and analyze your e-commerce store visitor statistics
- Most importantly, understand your customers and their shopping habits
Example of how FutureMargin can be used on Shopify
As a store owner you can easily install FutureMargin to your Shopify store and authorize it with Google Analytics. For example, a shop owner can quickly evaluate a discount strategy they’ve planned for a specific product range.
Assume a selected product costs $30 and selling price is $50.
In the first half of the month, an online store had 50 visitors, 10 sales and a profit of $200. The profit versus visitor rate was $4 per visitor.
In the second half of the month, a product manager introduced a 20% discount while implementing a ‘cart abandonment’ strategy (offering a 20% discount for customers to finish the check-out). The online store had 40 visitors, 12 sales and the profit was 120 EUR. The profit versus visitor rate was $3 per visitor.
In the end, although the online store sold more products, profit versus visitor rate was not higher. FutureMargin counted shop conversions and helped quantify the strategy performance.
If you introduce a discount for your customers on your Shopify store and manage to sell an extra 30% of your products, always analyze your data. Even with increased sales you might make less profit, due to shipping or drop-shipping costs etc.
Price optimization software can help you analyze performance of your strategy. You can then get most out of your Shopify store and increase your bottom line.
FutureMargin is a pricing tool for evaluating and driving pricing strategies for e-commerce 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.