Weekly Question | What pricing strategies work best for your products?

[Jacqui]

Hey Community!

This week we talk pricing. Sometimes figuring out what to charge for your product can actually be quite tricky. 

What pricing strategies work best for your products?

Do you find that sometimes charging more or less than you'd think improves sales? Do you have a specific formula that works best for your products and marketing strategy? 

👇Let us know below and make sure to include what you sell!
 

[Dotsquares]

hi @Jacqui 

Pricing can definitely be tricky, and I’ve found that it really depends on the type of product and target audience.

For higher-value products, I've noticed that premium pricing works best — especially when you emphasize quality, uniqueness, or added value.

Customers tend to associate higher prices with better quality.

On the other hand, for fast-moving or competitive products, competitive pricing or bundling offers have worked really well to boost sales. Sometimes offering small discounts or free shipping encourages customers to complete their purchase.

Curious to hear what strategies others are using! What’s been your most effective pricing strategy so far?

[Mikejames01]

Hello @Jacqui,

Pricing depends on your target audience, but I recommend at least 50% higher than the factory pricing for dropships.

[Quan-TrueProfit]

Hey @Jacqui,

Great question! Just wanted to share my thoughts.

When it comes to pricing strategy, a few key factors come into play: product niche, market competition, brand equity, and product lifecycle. Here's what we've observed from our merchants:

1. Product Niche and Market Competition:

   • For mass-market products (Red Ocean), merchants often adopt a penetration pricing strategy, setting prices similar to competitors to gain market share. Some even sacrifice profit to build sales and gather reviews (e.g., selling 1,000+ items with a 4.9-star rating from 100 customers).

   • For premium or innovative products (Blue Ocean), a price skimming strategy works well to maximize profit while competition is low. Alternatively, merchants can set prices based on unique product features and customer expectations.

2. Brand Equity:

   • Enhancing product features or packaging and crafting a compelling brand story can justify higher pricing.

   • Over time, delivering consistent value and building trust strengthens brand equity, allowing for premium pricing.

3. Product Lifecycle:

   • During the launch phase, a higher price leverages novelty and demand.

   • As the market evolves or new versions are released, price adjustments are necessary to stay competitive.

Additionally, charing customer more or less can impact sales if done in a proper way. For instance, some merchants slightly increase product prices while offering free shipping, enhancing perceived value.

[Quan-TrueProfit]

@damon467 that's very on point - psychological pricing is widely used across ecommerce merchants today and no doubt that it will make customer perceive the price cheaper than it's actually is.

[wahab-jnab]

Hi @Jacqui 

In my opinion, most customers prefer mid-range pricing, not too expensive and not too cheap. They want good quality at a reasonable price.

Pricing depends on several factors, including branding, market conditions, and target audience.
For example, I work with two skincare brands: Beauty Ninja, which targets a wealthy audience and has premium pricing, and Laur Skin Solutions, which caters to customers with lower purchasing power, so their prices are more affordable.

If your product is new and unique, you can set a higher price.
However, if you're selling a competitive product, it's essential to research your competitors' pricing.

[Raghav_Swipe]

Tldr;
A simple approach: Survey 100 people and ask these 2 questions 😉

1. At what price point do they believe your product is too expensive to buy?
2. At what price point would they be concerned about the quality of the product because it is too expensive?

I recommend checking the case study by the North American Case Research Association on BEWÖÖD, a recognized brand in the wooden fashion accessories market in France.

Considering our example and the fact that we're in SaaS, the pricing strategy that works for us is a freemium model. Once a user appreciates the platform and requires additional features, we can charge for them.

[lancemiller]

pricing is straight up one of the biggest lever most shop owners aren't pulling right fr. we learned the hard way that competing on price is a race to the bottom fr. tested about 8 different price points across our catalog last quarter and found some weird patterns.

our sweet spot ended up being slightly above average market pricing which signaled better quality. what actually worked for us was getting scientific about it. we tested price elasticity across different traffic sources (fb ads vs organic) and found we could charge instagram traffic 15-20% more than google traffic.

sounds counterintuitive but it positioned us as more premium and our abandoned cart rate actually went down. speaking of abandoned carts - that's where we found our biggest win lately. we switched to txtcart for recovery and it's been a game changer fr. the conversational ai can actually answer customer questions about pricing/shipping/etc right in the text thread which helps close sales that would've been lost. we're recovering like 26% of carts now vs 8% with email.