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Pricing a product isn’t just dreaming up a number of your choice without considering other factors. It is one of the most focus-requiring and crucial tasks because the product’s sale depends on it.
Online businesses dedicate a significant part of their time to pricing their product fittingly.
The fate of the product sale is dependent on its price. Therefore, a product should be assigned a price with the help of different strategies and thorough thinking.
Contrary to popular belief, a product’s price is not eyeballed when assigning it. There are a few things that online business owners look after before naming the price, such as customers’ interests and applying strategies.
Online businesses, mainly, price a product by calculating the costs associated and a good benefit.
Furthermore, other factors like human psychology also come into play when pricing a product. Thinking with the customer’s perspective acts as the best base to start when the pricing stage arrives.
Above all, different selling tactics like sales and discounts are also related to the customers’ psychology. Therefore, these tactics affect the sale of a certain product as the product price alters.
Continue reading the blog if you want to know some mind-blowing techniques on how to price a product.
Moreover, this blog will also unravel the common strategies successful businesses opt for while pricing a product on their WooCommerce business.
What Does WooCommerce Product Price mean?
WooCommerce stores contain a wide range of products, and each product has a specific and well-thought price. This price is called the WooCommerce product price.
Adding Product Price on your WooCommerce Store
If you manage your online business through Woocommerce, you may be aware of how easily you can showcase your products’ standard prices and retail prices.
Here’s how you can add or change the price of the product on WooCommerce:
1) Log in to your WordPress account
2) Now click on the “products” option then select “Add new”
3) Next, you will be required to enter the name, description, and product price, including shipping and tax information.
4) After this, click “Publish” to finish the process.
After completing all these steps, WooCommerce will showcase your product on your shop page. Setting up prices for products is a piece of cake. However, setting discount options is a bit complex.
But we come bearing a solution for that as well. With the help of the “WooCommerce Discount Rules” plugin, you can easily put up a discount without messing up the pricing of the product.
Furthermore, you can even schedule discounts if you aren’t planning to put up discounts right away. “WooCommerce Dynamic Pricing” plugin has made setting discounts much easier.
Pricing Strategy And Its Significance
Every business’ pricing strategy comprises all the necessary components such as cost of material, labor charges, and benefit.
It may come as news to you, but brands don’t go into a loss when they put up huge discounts and sales. In fact, sales and discounts are their tactics— the best ones— to increase their product sale.
Businesses think through what they are about to implement to achieve splendid results from their tactics.
To summarize, an impeccable pricing strategy is what makes your products sell rapidly. Therefore, having a good pricing strategy should be every WooCommerce business owner’s priority.
Top 10 Product Pricing Techniques for WooCommerce Businesses
As we mentioned above, pricing is the most challenging phase when selling a product. Often brands fail in this stage because of their poor pricing tactics.
To help with this problem, we are here to present the top 10 Pricing strategies that can save your business from going downhill all because of improper pricing.
1. Retail Price: The Basic Technique For Product Pricing
If you pay attention to the pricing of a product before buying it, you will notice how retailers increase the price in order to attain a healthy profit.
They add the cost of labor to the product price along with a bit of profit. The profit retailer gets depends on the manufacturer as he is the one who decides an appropriate amount after considering all the charges.
The most common formula used by the retailer to decide the perfect price is:
Retail price = [cost of item ÷ (100 – markup percentage)] x 100
This strategy may not suit every business as a different business means different challenges. Therefore, thinking the plan through before blindly applying any strategy is essential.
2. Manufacturer Suggested Retail Price (MSRP): Convenient And Safe Way Of Pricing
When a manufacturer supplies his product to a retailer, he also provides a retail price that he deems appropriate after considering the labor, material, and shipping charges.
The price that the manufacturer proposes is called Manufacturer Suggested Retail Price.
The gist of MSRP is to avoid the fluctuation of prices in different retail shops. Applying this strategy means that there will be a uniform price of a certain product overall retails shops.
However, this technique may not be the best option for all types of businesses. This strategy works best for standardized products such as laptops and furniture.
WooCommerce business owners are not bound to follow any rules while pricing the product. Retailers have the right to price a product in any way they prefer.
Nevertheless, if the difference between MSRP and the retail price is considerable, this can significantly hurt the business’s revenue. In addition, doing so can violate the supplier agreement and leave a bad impression on the supplier, leading to a canceled deal.
3. Keystone Pricing: Higher Risks And Higher Profits
In keystone pricing, the retailer sets the double price of what he paid to the wholesaler. By applying this strategy, there may be chances that the retail price gets exceedingly high or really low.
There are several benefits you can reap by applying this technique. For instance, its formula is comparatively easier and it also lends a hand in earning high-margin profits.
The gain from this strategy is that it promises a handsome profit, but on the other hand, they endanger the flow of sales of high commoditized products.
This strategy will not work for any retailer unless he possesses a product that is a hot topic of the time. This strategy is also known as “the rule of thumb”.
4. Product-Bundle Pricing: Psychological Strategy For Increasing Sales
This strategy is one of the most advantageous ones when it comes to pricing. You may have noticed how different food outlets introduce deals where they sell several things at one price.
This tactic attracts a lot of customer attention which means increased revenues.
Product bundle pricing gives you a huge advantage of putting together more than one product and setting one price for all the products in the bundle.
Although this tactic is famous among food franchises, it is also used by other industries.
This pricing strategy is opted by almost all stores. The most common example that can explain this strategy is getting a burger, fries, and drink at one price or a pack of 3 shirts.
This increases sales and puts “upsell” and “cross-sell” tactics into motion as well.
This strategy mainly plays with the human mind and tricks them into thinking that they are getting better and more products at a lower price.
The price is low due to the low benefit margin. The profit from product-bundle selling is low, but the prime advantage lies in the fact that the sales are consistent.
5. Loss Leader Pricing: Luring Customers Through Enticing Offers
Loss leader pricing strategy sounds like a bad idea when you say it out loud, but that is not the case in real life. This strategy belongs to the family of market-basket analysis.
If you don’t know what Market-basket analysis is, then don’t worry, we got your back. In the market-basket analysis, retailers identify the products that go very well together.
This is done to achieve an increase in the sales of a particular product. Some examples can be milk and bread, needles and thread, etc.
So, this is how the loss-leading pricing works:
- The retailer puts a specific product on an attractive offer.
- Customers don’t take long to notice it and swing by to avail the offer.
- Once consumers avail the offer, professionally persuade them to purchase other products.
- Therefore, the profit will be extraordinarily narrow, but the retailer can make up for the loss by increasing the sales of other products.
It is stated that this strategy can turn the tables when it comes to your business. However, using this strategy wisely is better than using it every now and then.
Applying this tactic on a regular basis won’t increase sales; instead, it will decrease your brands’ value.
6. Discount Pricing: The Sales Booster
Offering discounted prices to your customers will surely lure them towards your products, which will help you generate handsome sales.
According to a research, about 93% of the customers use coupons and avail the product’s discounted offers. Sales are the most awaited part of every season for the customer.
The commencement of discounts, coupons and huge sales results in a huge number of customers for your store hence, you can observe a boost in your sales.
Most of the price-conscious customers wait eagerly for seasonal sales and always are the first to grab discount vouchers.
Therefore, the implementation of sales on your products to gather massive traffic towards your brand is totally legit, and the results will surely be fruitful.
Furthermore, the seasonal sale helps the online retailers clear the sock and prepare themselves for the upcoming stock.
No doubt the application of discount strategy will lead to an ocean of customers. One of the setbacks you might encounter is that your customers will start doubting you as bargain retailers.
You can set up discounts easily using WooCommerce Dynamic Pricing Plugin where there are many useful features included in the free version itself.
However, if the drawbacks are set aside, this strategy, also known as penetration price strategy, is extremely helpful for the new starters in the business world. This plan will help create a stable and robust customer base, and thus your business will flourish.
7. Competitive Pricing: Keeping In Pace With Rivals
This strategy will assist you in determining your competitors’ product rates. By analyzing the market rates, you will be able to price the product conveniently.
This way of Woo-commerce pricing plan is product-driven. Specifically, you will observe tough competition of rates among the brands selling similar products that have the same roles and usage.
By applying this method of product pricing, you will be able to evaluate your products’ price easily. However, one can’t prove this strategy to be high-yielding for small businesses.
8. Psychological Pricing: The Best Way To Attract Customers
Have you ever wondered why the leading brands and companies’ product prices end with the odd number 9? What is the game behind this strategy? How is a single penny helping them in generating huge sales?
This may astound you for a while, but as per the research, the prices of the products that end with 9 develop the sense of slashed prices in customers.
In human psychology, the price of what a person sees, for instance, $7.99, the human brain will read it like 7 dollars.
However, if it is read properly if you round it off, it’s $8. So, to every customer, $7 will appear as a better option.
These all are manipulation tactics that the brands apply to lure customers towards their products.
Many pieces of research conclude how significant digit 9 is in terms of generation of sales. This is a very descriptive concept which you can learn about.
You must know that this psychological pricing relates to human mind manipulation. Specifically, through this price-setting strategy, you psychologically motivate your customer to make the purchase.
Therefore you can define this method of pricing as customer-specific pricing for woo commerce.
9. Price Skimming: Less Time, Big Profits
This price skimming is referred to as the pricing strategy where the eCommerce business holder charges the highest prices initially and then gradually lowers it with the passing time.
When the customer’s demand is fulfilled, and that new competitors also acquire some position in the marketplace, the business starts to lower their price to grab their attention and capture their interests.
This strategy’s main benefit is that it helps you gain a handsome profit initially when the competition is not much high.
If you want a source of acceleration in your sales in a short period, then the price skimming approach is fruitful in this case.
This pricing strategy has been applied by many well-known brands that have a strong place among the leading brands.
10. Economical Pricing: Friendly Pricing For Every Customer
It does not matter if you are a new or a veteran business owner, it will not affect your customers until your prices are reasonable for them.
If you have pitched potential customers, it does not mean the customers will always want to spend more whenever they shop. The usual shoppers look for optimum rates.
For instance, the rates for the commodity products should be market competitive and average. So in order to price every product appropriately, an economic pricing strategy for WooCommerce products is designed.
The commodity products such as dairy, medicines, grocery are priced under this strategy. The economy pricing strategy implies those products priced at optimal rates with the least profit retained.
When dealing with such products, then the profit earned is solely dependent upon the sale of each product.
The price set for the products is as per this calculation:
Price = production cost * profit
The economy pricing strategy is applied straightforwardly and is an ease for the price-sensitive customers who can now purchase the product in abundant quantity.
However, some retailers demand standard quality products with a minimum profit margin to maintain their revenue consistency.
Essential tips for B2B sellers to assign WooCommerce rates:
The following key tips must be followed while designing a product pricing strategy.
- Calculate the profit margin for every product separately to point out the difference in the sale price and bulk purchase.
- Calculate COGM. For every product, the manufacturing costs include material cost, labour, payments, transportation, etc.
- To calculate the profit margin, this formula is implemented in calculations:
Retail profit = retails price – cost price / retail price.
- To avoid any confusion, clearly differentiate your direct to customer price and business to business price.
After reading this blog, we believe it is safe to say that pricing is the foundation of a thriving business.
With such a wide range of strategies available, one must not decide hastily as hasty decisions always destroy good things.
Furthermore, don’t mix strategies up. Always opt for one strategy at one time. Above all, never use any strategy for a long time as it diminishes the spark created between you and the customer.
Switching strategies is far better than boring your customers with the one you have been using for a decade.
The saturation of online businesses has increased the competition considerably. Therefore, it is important to do everything you can to do better than your competitors.
Acowebs are developers of WooCommerce Discount Rules that will help you personalize your stores. It supports the additional option with feature-rich add-ons which are woocommerce product addons, that are lightweight and fast. You can easily update your store with these add-ons and enjoy a hassle-free experience, check out the best options for additional woocommerce custom product options.