As technology is upgrading, consumers are getting more aware of the products and services they are buying online. Gone are the brick and mortar eras where customers were warned to be aware.
Customers are well aware of the fact that the online prices of the same products differ as per the website. So, they scroll through different websites until they get the best deal. Consumers use various tools to substantially decrease the time that is taken in this search.
You, as a business person, have a responsibility to understand that process and use various tools for the betterment of user and consumer experience. As well as this, you might have a major concern that with every day passing by, the number of people entering into online business is increasing. Due to this, the competition gets stiffer every day.
You, as an online seller, are advised to do your best and endeavour to surpass this competition. You will have to understand that there is no effortless way to do this. Then why are we here? We can guide you to take your initial step to overcome this competition.
The very first thing that you will have to accept is that price plays a major role for buyers to decide whether to buy a particular product or not. The online market, at this time, is flooded with similar or same products of different brands. As the features of products are the same, the matter of concern comes to the price of the product.
If you still believe that features play a major role in marketing and buying-decision, here’s some research for you. The research clearly shows that buyers are 27% convinced by the price of the product.
Will I ever be able to get ahead in such stiff competition?
Yes! Of course. You don’t need to feel hopeless about these facts. All you need to do is understand reality and take action upon it. Here’s the first step:
Conduct price analysis for your product
You might be thinking that it will be a stressful process, but believe me, it’s not.
The first step towards standing out in this competition is to have a look at where do you really stand now?
So, for starters, see who your direct competitors are and the ones who compete indirectly—the prices they are offering as compared to your price.
Consumers are well-informed and aware of how to find the best prices, so you also need to be smart enough.
Consider calculating price index
When you have identified your competitors, it is necessary to know the standard prices of all your products in the market.
Here, the price index is not discussed in detail. But yes, we can discuss it in another blog, which tells, “How you can conduct Price Index Analysis.”
For a brief, I’m giving the formula for getting the price index for each product.
(COMPETITOR PRICE / YOUR PRICE) * 100
Why do you need to get an average price for each of your products?
In case the price index of your competitor of a particular brand product is better than that of yours, it is a possibility that they are getting the product at a lower cost. As you know, you can bargain with your supplier.
In case the price index of your product is better than others, you have a competitive advantage; thus, you can simply increase sales by focusing on the marketing of that brand.
If a brand doesn’t seem to be profitable, you can take your steps back and focus on some other brand products which are profitable enough.
So, having information in your hand would help you get to the right decision faster and easier.
Use historical price records
We understand that if you start maintaining the pricing records of your competitors, it would cost you time and money.
But it would be very helpful for you in the long-term. Understanding the price strategies like discounts they offer during festivals, off-season, etc. when are prices at peak and other minor details of your competitors would assist you in planning your price strategies and would reduce the risk of loss to minimal.
Apart from analysing the competitor’s records, you can also get insights into your records. Some points that should be noticed are about the brands that are sold the most, elasticity of products of different brands, which pricing strategy yields the most results for you. In addition, you can also track the demand of various brands at different prices.
Now, we’ll see how we can make this troublesome process easier.
Change your game with price comparison software
You can track competitors’ price record while adjusting your prices as per your requirements and maintain a long-term pricing record with the help of pricing software.
There are online sellers who prefer to make their own tracking records, and some use pricing SaaS. We also provide pricing software, Price Checker, which provides all the above facilities.
For example, you can instruct to keep the price 5% below-average while not compromising on the 14% margin. The software will do it for you. Simple!
These short and long term records can change your game in some time and will start to yield more profits.
When you are a part of retailers selling their products online, you must know the value of effective pricing strategies as consumers constantly look for the best prices available.
Firstly, you should know your position in your competitive landscape, along with the knowledge of your direct and indirect competitors. Then, you need to make an appropriate decision regarding different brands as per the price index of different products.
In order to get leverage over competitors in long-term, competitor pricing must analyse trends and patterns of competitors. To make it easy and less stressful, you can take the assistance of tracking software like Pricechecker.
Frequently asked questions
Q1. How can I compare and analyse the prices of competitors?
Ans. It's a simple three-step formula:
- Track prices of your competitors
- Calculate and compare price index
- Notice trends and patterns by analysing historical pricing records.
Q2. I have often heard the term Fair Price. What is it?
Ans. A fair price is basically a price that is consistent with what the buyer is ready to pay for your product. Like what is the maximum price that the buyer is willing to pay for your product.
Q3. What pricing strategy would be best for me to adopt in my business?
Ans. In order to determine the perfect pricing strategy for your business, you need to keep knowledge of all the pricing strategies, including their advantages and limitations.
Now, as per your business types and what you aspire from your business in the future, you can adopt a single pricing strategy or merge together a few strategies to get the best for you.