The process of pricing

The process of pricing is often greatly misunderstood. Putting a price on your product involves a lot more than calculating your expenses and then giving it a simple mark-up so there is profit to be made. As a matter of fact, there may be times when you wish to sell without a profit margin, and there may be instances when you price your product seemingly ridiculously high, far above the competition.

Sounds strange? Whilst there are many factors you should consider when it comes to pricing, it doesn’t have to be a very complicated process. Would you like to know how the professionals maximize profits? Here’s your all-important guide to pricing as an e-commerce enterprise.

Understand your customer

Your All-Important Guide to Pricing as an e-Commerce Enterprise

It’s a basic principle of any kind of business: understand your customer. Depending on the kind of product or service that you’re selling, you should have a certain target demographic in mind – that ideal person or business that is best served by your product and service. Armed with that information, you can ask basic questions:


  • Is value or price more important?
  • Are they easily persuaded by promos and deals?
  • What strategies can you use to sell?

Your product

Your product is the main consideration of how someone will judge whether or not you employ fair pricing principles, of course – but there are other factors involved. For example, your image as a brand is equally important, and if you are involved with charitable or eco-friendly organizations, you may be able to charge differently. Your pricing should be as high as possible, yet give the feeling to the customer that they get great value for their money.

Price and volume

You’ve seen ploys and schemes like this in the brick-and-mortar shops, and they work equally well online; giving your customers discounts based on purchases of larger volume tends to entice them.

Consumer-oriented pricing

When trying to decide your price, think first about the consumer – do research about what your customer would be willing to pay for the product. Your customers will use certain reference points in gauging whether or not your prices are fair; what are those reference points?

Market-oriented pricing

Another approach is by looking at the market and trying to beat the competition. Tools such as repricing software can help you get ahead by adjusting your pricing according to market factors, and may even allow you to win the Amazon buy box.

Remember that your pricing decisions should never be made based on a few selected, important factors; all factors have to be weighed and included in the decision-making process, depending on your priorities. Naturally, a business should always be dynamic and willing to adjust and re-examine their strategies based on the environment and changes in the industry. Pricing is all about the maximization of profits in the long term; it’s a marketing strategy.

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