Do you know the most substantial factor that one must consider before building an online marketplace platform? It’s online marketplace pricing! The reality is that the pricing model of the eCommerce Marketplace actually determines the rate of its success and generates better traction, which results in better business growth.
When a person invests their time as well as money in the eCommerce marketplaces like Temu, selling the products alone is not everything for them. As the owner of the marketplace, you have to work on the eCommerce pricing strategies too. In short, everything needs to be profitable. The layman can easily say; that a selling price needs to be more as compared to the cost price for making the profits. What do you think; pricing the products randomly can help you in building a good eCommerce business. Of course not! Overpricing can result in low conversions, which will make customers sway away from the products. Also, underpricing will not help you in making the deserving profits.
So, it’s very important to price eCommerce products in a perfect way by keeping in mind all the pros and cons. If you are the one who is going through this post, then that means you are planning to start an eCommerce business.
What is an eCommerce Pricing Strategy?
Let’s understand first what is an eCommerce pricing strategy. It’s a plan that can help you determine how accurately you price products for increasing sales as well as profits while staying competitive. There are different e-commerce pricing strategies that are used which depend on the sort of products sold, the demand for the product, and competition.
Why does your Ecommerce Marketplace Pricing Strategy matter?
To take your business to the heights of success, you need to select the pricing strategy carefully. Why? Since the pricing strategy states customers’ important information regarding your product, your product’s value, the way other customers value it, and so on.
By deciding the proper pricing strategy, you can boost your sales, stand ahead of your competitors, and much more. Even it will also hit the objectives of your sales.
So, this guide will help you understand all about how you can set the right price for your eCommerce market. So, without wasting time, let’s get started with it! Happy Reading!
1. Begin with the Right Action Plan
When it’s about pricing the products, there are the latest marketplace pricing strategies that the majority of businesses use. Some of them are dynamic pricing, cost-plus pricing, value-based pricing, competition-based pricing, price skimming, penetration pricing, and so on.
Once you identify the correct plan, start implementing the pricing strategy across all the products. Even a few companies prefer hiring experts who specialize in such a field.
2. Determine your Goals and Constraints
According to many people, making enough profit from the marketplace is the main motive behind price optimization. However, profit enhancement is the major motive for marketplaces to reform their pricing policies. Many marketplace goals are different behind price optimization, such as upselling, attracting new clients, customer retention, etc.
Restrictions, too, are unavoidable. It might be your sellers won’t be able to drop the prices just below a certain limit. It might be you can’t restrain the costs of a certain department. So, complications must also be taken into consideration when determining the goals. Therefore, whatever your constraints, put them straightforwardly and write them properly before devising your pricing strategies.
3. Your Target Audience- eCommerce Marketplace
Do you know you can increase sales by knowing your customers well, like what they are in search of? Just think about the brand that sells luxury items. No doubt, customers who want to buy high-class items will look for the best deals, but they will also be ready to pay high for the best quality. So, in this case, a too-low price can scare them away.
Your pricing strategy should benefit you as well as your customers. So, knowing them more will help you in knowing what can truly make them happy.
Also Read: The Most Successful SaaS Marketing Strategies To Try
4. Study your Market and Customers- eCommerce Marketplace
Having the data organized is the foremost step that one must consider before strategizing the marketplace pricing, and this incorporates qualitative as well as quantitative data.
So, if we talk about quantitative data, then it encompasses the hard market analysis and embraces demographic information of the area working, supply and demand, competitor prices, market specifics, sales metrics, and so on.
Customer surveys might help in collecting qualitative data. For that, simply speak to current customers. Measure the customer’s response to your discounts, promotions, deals, product bundles, etc. After converging all this information, jump to the next plan.
Also Read: Learn How to Improve Your Landing Page Experience
5. Analyze your Marketplace
Do you know your pricing strategies rely more on the marketplace’s internal affairs, such as sellers’ profit margin, average transaction amount, transaction number, and so on? So, keeping marketplaces estimates, capital, revenues, and expenditures at the fingertips is quite imperative.
Accounting for shipping costs, marketing costs, warehouse costs, employee salaries, and so on is also an important thing to consider. It’s vital to know the amount of profit you have to make to meet all these expenses in the procedure of preparing the pricing strategy.
Also Read: Account Based Marketing: A Complete Guide
6. Know Your Value Metric
Do you know the appropriate value metric has a major influence on the success of your marketplace? It determines the means your profit increases. For this reason, you must align the model of value metric with the model of customer acquisition.
7. Pricing Strategies to Start With
Setting a perfect eCommerce pricing strategy is quite vital for the eCommerce marketplace; however, it’s not that simple. The reality is that it takes enough time, don’t matter how experienced you are as an entrepreneur.
Before we start with pricing strategies, let’s understand what is actually pricing strategy. In simple terms, it’s a set of methods utilized by businesses for pricing their products. Nailing your pricing, no doubt, is the best means by which you can enhance your conversion rates.
Running an eCommerce marketplace without the proper pricing strategy is similar to running a race which is without a track. So, a proper pricing strategy is needed to ensure you don’t charge the products too high or too low.
Use Coupons and Free Options
Who doesn’t love discounts? Do you know digital coupon codes have become the most popular marketplace pricing strategy? Yes, you heard it right! They absolutely work great when you are trying to bring in new customers or persuade buyers to make the purchase.
Don’t begin slashing too quickly
Many customers feel that the lowest price is best; however, they don’t always think the same way. Having the odd price of the product from your competitors can look suspicious to customers. So, rather than slashing the pricing too quickly to gain enough customers, look for some other ways to save money.
Automating Price Optimization Plan
Calculating the data for hundreds of products, no doubt is a tough task to do. Constant changes in data imply constant calculation. And if we talk about manual calculation, then it’s almost impossible. So, automating the plans can be the easy way to do the same.
You can take the help of the software automated price optimization that can help you in monitoring and optimize the prices constantly.
There are a few tools that can analyze the data of your marketplace and recommend the ideal price options for your marketplace.
Also Read: Fascinating WordPress BuddyPress Marketplace Ideas
8. Different Marketplace Pricing Models
Do you know the different marketplace pricing models? If not, then go ahead to know about the same!
- Commission: Commissions are simple to implement and the most popular marketplace pricing strategies. Some of the biggest platforms that ask for the commission are Airbnb, Upwork, Etsy, and so on.
- Subscription: You can also charge the subscription; that simply implies; that customers will pay every month for using the platform.
- Listings: You can also charge fees for listings. Like, for each product listing, Etsy charges some listing fees.
- Ads: Your customers may pay you an ad fee to get more visibility.
Also Read: Online Remarketing Strategies for Lawyers and Law Firms
The takeaway from eCommerce Marketplace
I hope you have enjoyed reading this amazing guide, and it will surely be going to help you. Remember, pricing is fluid; it constantly changes, so a proper pricing strategy is vital if you are running an eCommerce marketplace.
You better know your business, so be impartial with the pricing. Shoppers these days are smart enough so remember to make smart choices with the pricing strategies as it will be good for your business only.
Before brainstorming on price-optimizing strategies for the marketplace, ensure to invest some time in analyzing the marketplace. So, it’s better to evaluate the strengths and weaknesses of your marketplace as it will benefit you in the future.
Best WordPress Plugins for Developing an eCommerce Marketplace
Digital Marketplace Business Model Overview