While there are many ways to arrive at a pricing strategy, there are still the basics to consider, including product positioning, market demand, your costs and of course your margins.
However in today’s fast paced e-commerce world how often do you take stock of all these factors?
Not only do you have to look internally, you have to be knowledgeable about your competitors and their pricing strategies as well.
The large majority of retailers today cannot afford to take their eyes away from competitor pricing. The Internet has made pricing transparent and a dynamic pricing strategy is probably the most important weapon in a retailer’s armoury.
In the past, pricing strategies were usually based on local knowledge and ad-hoc glimpses into the competition. As such strategies could be slowly created and kept in place for long periods of time.
Today the dynamics have changed and the need to react quickly to existing and new competition is ever present. As your competitors change their pricing almost daily and in some cases hourly, you need to be able to respond in a similar fashion.
Price strategies are not just a matter of matching competitor pricing but they have to consider all the elements as a whole. However with the market changing more rapidly than before, the days of not having a dynamic pricing strategy are long gone.