If you do not have a pricing strategy, how do you intend to boost your dropshipping sales? I am sure you have heard that most of your competitors have great pricing strategies. Here is the thing. If the price of your product is too high, you probably won’t land many sales. And if the cost of your product is too low, you might not make as much profit. To succeed, you have to select the right pricing strategy.
What Are Pricing Strategies
A pricing strategy is used to set the prices of products being sold. It is one of the marketing tools and is commonly used to portray the perception of a product or brand.
Different Types of Pricing Strategies
Here are the different types of pricing strategies that can help boost your dropshipping sales:
This is when retailers or sellers determine the price of a product by doubling the wholesale cost they paid for the product. But this strategy is not always practical for products that are easily found elsewhere. Although for rare products, it ensures an ample profit margin.
This unique pricing strategy follows the present market rate for a product. This strategy requires that you price your products based on research of the prices offered by your closest competitors. You could set the cost of your products the same, lower or higher than your competitors. This pricing strategy is more effective in a saturated niche where customers might pick one similar product because of a bit of price difference.
If you have ever entered a discount store, you have experienced psychological pricing. This strategy involves using human psychology principles to drive sales up. A popular tactic is charm pricing; this is when the price of a product ends with 9, 99, 95, 98, or 99 to make it look cheaper than it is. This tactic works because when customers read from left to right, the number seems smaller. A
Another psychological pricing tactic is referred to as price anchoring. This tactic works by fixing the price high then offering a lower cost to make the price look like a fantastic deal. For example, “$200NOW$150“. If customers in the target market are drawn to discounts and sales, this pricing strategy will be a good fit for you.
Manufactured Suggested Retail Pricing
The manufacturer recommends a retail price to the seller in this pricing strategy. Manufacturers first started using pricing strategies to help regulate different prices of products across several locations. Most retailers use this pricing method with regular products such as home appliances and consumer electronics.
Multiple Pricing Strategy
You have most likely seen an example of this pricing strategy at the grocery store, but it is pretty famous for apparel as well, especially for underwear, t-shirts, and socks. With this pricing method, retailers sell multiple products for a single price. This strategy is common among retailers trying to create a higher recognized value for a lower cost, which will lead to an increase in sales. Another significant advantage of this strategy is that you can sell products separately for more profit.
Premium Pricing Strategy
This pricing strategy involves the retailers setting a high price to increase how the product is perceived. It is also commonly referred to as luxury or prestige pricing. This pricing method is used majorly by luxury brands in the hospitality and fashion industry.
Loss Leading Pricing
This pricing strategy involves increasing the average transaction value. Most of us have practiced this unknowingly, remember that time you walked into a store after being promised a massive discount, but instead of walking away with just that product, you end up buying several other items as well. With this brilliant strategy, retailers lure customers with a specific discounted product and encourage them to purchase other items. This tactic effectively makes customers buy several items in a single transaction and has been known to boost overall sales per customer.
In this pricing method, the price of your product is controlled by the sales volume. It is commonly used for commodity goods such as drugs or groceries, where the company does not have a significant brand to help with its marketing. This tactic relies on selling many products to new customers regularly. This is one of the most straightforward pricing strategies to implement.
Price Skimming Pricing Strategy
This pricing strategy is when the retailer changes the highest initial price that customers will pay, then decreases it over time. As demand from the first set of customers is met and more competitors come into the market, this strategy lowers the price to lure a new group of customers. This tactic aims to increase revenue while competition is low and demand is high.
There you have it! Above are some pricing strategies that can help boost your dropshipping sales. As a dropshipping business owner, having the right pricing strategy is crucial. With the right cost, you can increase sales and make more profit from your dropshipping business.
In case you will like to know more about dropshipping or other services we offer, contact us today at Fulfillman. Our dedicated team will be available to speak with you. We will provide suitable answers to your questions and concerns. An amazing experience awaits you.