Everyone likes a bargain, so it’s hardly a surprise that when it comes to selling online, the price you charge for your products is going to have a big impact on your sales.
But just how much does the price actually matter? And what other factors affect the influence of pricing? Should you just charge the lowest price you possibly can? And how do you know when it’s time to raise or lower your prices?
In this article we look at how price affects buying decisions, what else you need to take into account and how to come up with an effective pricing strategy to boost your products visibility and sales.
Understanding buyer perception
make sure you price is attractive relative to the average buyer’s expectations
How do buyers decide if a product is a “good price”? The answer, of course, is that they want good value for money, which is why buyer perception is so important. There is no such thing as a hard and fast “good price” for any product, instead the key is to make sure you price is attractive relative to the average buyer’s expectations.
This matters, because if a buyer thinks a product is too expensive, they may feel you are trying to rip them off. However, if the product is too cheap, they may worry about its quality or authenticity. Your pricing therefore needs to match the buyer’s perception of the objective value of your product, taking into account the brand, quality, condition and other “value” factors.
The trick then is to get your product in the optimum pricing window, where it will attract the most possible buyers, while still guaranteeing you a healthy profit margin. To get this right, you need to understand the other factors which affect how potential buyers judge the fairness of your pricing.
Staying ahead of the competition
81% of shoppers do research online before making a purchase
Unsurprisingly, the most important influence on buyers’ perception of your pricing is what your competition is charging. 81% of shoppers do research online before making a purchase, which means people viewing your listings are likely to have a good idea of what the market price is when considering a purchase.
The obvious answer is simply to set your prices lower than those of your competitors, but how low should you go? And is this really the best solution? The truth is, even when competitors are selling similar or identical products, it doesn’t always make sense to simply undercut them on price. Not only can this hurt your profit margin, but the prices may not be a fair comparison as there are various other factors which can affect buyer perception of whether you are offering a good price.
Selling on an unlevel playing field
While the product itself is obviously the most important consideration when it comes to price, you are unlikely to be selling on an entirely level playing field. This is because things various other things influence the price a customer will be willing to pay.
For selling online, one of the biggest influences is likely to be the cost and speed of your shipping. If you offer free shipping and a competitor charges £3 for their shipping, then customers are likely to still choose to buy from you, even if you charge £2 more for your product. Likewise, if you offer next day delivery, many customers will be willing to pay more for the convenience.
Other major factors which influence the price you can charge include your returns policy, seller rating and the quality of your images (as this increases the perceived quality of the product).
Therefore, when making a pricing decision, you need to look at more than just the price of your competitors’ listings, but also the quality of their listings and the service they are offering. This will give you a much more accurate picture of how your own listings compare for that all important sense of value for money.
The power of promotions and discounts
Keep promotions and discounts simple and easy to understand
A simply, but very effective way to make customers feel they are getting a bargain is by running promotions and offering discounts. eBay makes it simply to offer discounts and other promotions using the eBay Promotions Manager.
More than 64% of internet shoppers wait until products are on sale before making a purchase, according to one recent survey. The data also shows that 22% of online consumers only buy products from their favourite brands when there is a discount or other kind of promotion in effect.
This shows just how keen buyers are to snap up a bargain and also suggests a strong fear of missing out i.e. that if they purchase at full price, they feel that they are losing out because they are used to getting a discount or other promotion. It is therefore worth thinking about the kinds of deals and promotions you might want to offer when working out your overall pricing strategy.
It’s worth bearing in mind that customers’ perception of what is a good promotion, may not always be the same as what actually offers them the best value. If the amount they can save with a promotion is too complicated to work out, it can undermine the perception of value, so it is important to keep promotions and discounts simple and easy to understand.
Find the most attractive prices for your eBay listings
Working out exactly where to set your prices on eBay can be hard, especially given that what is the best price to maximise sales today may not be the same as it was last week or will be next week. Knowing how much of an impact pricing can make on your sales only adds to the pressure to get it right.
Fortunately, there is a simple way to keep on top of your pricing strategy, making sure you always stay on top of the competition so your listings remain more attractive than your rivals – enter ListSmart.
ListSmart is a listing optimisation app which uses machine learning to analyse millions of eBay listings, producing up-to-the-minute data on how pricing and other factors are affecting the sales of real products. ListSmart then shows you how to make your listings more like those which are achieving the best sales, including how to tweak your pricing to get more clicks and conversions.
With ListSmart in your corner, you never need to worry about pricing again, because you’ll always know when it’s time to lower or increase your prices to stay competitive and maximise your profit margins and sales.
Sign up now for free to see just how big a difference ListSmart can make to your eBay listings.