You have to be aware of your competitors’ pricing, otherwise, you can lose a lot of sales.
Look at this example.
Why would anyone pay $2089 for an iPad when they can get the same exact model for $1264?
If you ignore your competitors’ pricing you can end up setting a price that’s way above the market average.
And then your product gets to sit out there like a lame duck.
It’s much harder to track competitor pricing for an eCommerce brand for 3 reasons:
-It takes way too much time to track ALL of your products -There are too many platforms to track pricing on -You need a gazillion spreadsheets to have a handle on profit margins for each product, on each of the platforms or marketplaces.
That’s why you need to use a pricing automation tool.
Manually tracking 20 competitors on 50 products takes approximately 12.5 hours.
And before you can complete the task even once, your data becomes obsolete.
We’re used to seeing hourly, or even minute-by-minute changes in online prices.
That’s why you should use a price tracking tool like Prisync which automatically collects competitors’ price and stock information for you and shows them in a single dashboard.
But that’s not the only thing that pricing software can do for your eCommerce business.
One crucial investment that made Amazon what it is today was its dynamic pricing engine which Amazon started testing in the early 2010s.
It gave the retailer an incredible advantage: being able to match or beat anyone’s price in the market.
Pricing automation tools are much cheaper today so small businesses and eCommerce brands can use them to set dynamic prices and compete with the giants.
Dynamic pricing is a strategy where you change your pricing based on market conditions and your own preferences.
For example, with Prisync you could set a rule for your product’s price to be set at 5% higher than your cheapest competitor.
The tool will calculate your costs and always set the price above the threshold that you set, so you don’t have to use a gazillion spreadsheets to track your profit margins.
That means no one can catch you off guard with their surprise discounts, and no price change goes unnoticed, and you always stay ROI positive, on every order.
Speaking about ROI, that’s another thing that a pricing tool could help you with.
Whenever you can increase your profit margins, you should.
And pricing automation could help you do that.
For instance, the retailer below is selling the same headphones for $60 cheaper than their next competitor.
This store could charge $370, and they’d still be the cheapest. And if they were using a pricing tool to catch this, they would have made $50 more on every unit!
But you don’t always have to wait until there’s a general increase in market prices. When competitors are out of stock, you can increase your price. Even if it’s a slight increase, you should go for it.
Be realistic about your target profit margins.
Instead of focusing on one or a few high return products, track competitors on all products, and take every opportunity to improve profitability.
Just Tools, for instance, a 40-year-old power tools retailer with over 15 years of digital experience, could only track their top 2-3 competitors.
That’s all they had time for.
They realized that they were missing out on a huge amount of data.
That’s when they decided to start automating their pricing process.
Once they switched to a pricing software, the number of data points jumped from 30-40 per week to 14,000.
It’s an incredible 466x increase in scalability.
But more importantly, tracking all those products they had to overlook before helped them take the regular 6-months period growth from 1% to 5.5%.
It’s a striking 5.5x increase in revenue growth that equals a $13K marginal revenue increase.
In other words, a $119/mo tool led the brand to 38X its ROI.
Every pricing decision is important to your business’ growth, and that’s why you need to use data to make the right decisions.
Don’t just rely on your gut, or price your product according to your costs.
It’s also about finding a balance between selling as much as you can and making a meaningful profit from each of your products.
And that calls for a solid data collection mechanism.
Manual tracking gives you a limited awareness, but that’s never enough to thrive in a competitive, super-crowded market.
Pricing software democratized what was once a privilege of the largest companies that could invest millions of dollars into dynamic pricing algorithms. Now, SMBs can benefit from affordable SaaS to maximize their ROI.
Before making your next pricing decision, make sure that you: