Last updated - February 24, 2020
When you think about boosting the sales on your online store, there might be a lot of strategies can rely on. Pricing strategies are definitely something that comes to your mind pretty easily. You can pretty easily get the attention of your prospective customers if you are maintaining good pricing strategies on your store. However, you may have to do some solid research to understand you customers’ buying patterns and competitions in the market. Moreover, you should find a strategy that suits your store and customers. This article will take a look at some of the interesting WooCommerce pricing strategies that you can apply on your store.
Lowering the price too low is not a great option
On a simple point of view, you might think a low price is what customers are looking for. This is far from true, as there might be a lot of other factors in play such as brand value, sense of quality, value for money, etc. Many a times an extremely low price would make customers feel that the product is not genuine. Also, the perception of your brand will be impacted in the long run, if you are always trying to woo customers with low prices. It is a better idea to do a thorough market research to understand the perceived value of your products.
Take the customers’ perspective
eCommerce has become majorly oriented towards customers and their perception. After all, it is what they perceive about your brand or products is what really makes or breaks your business. Traditionally, pricing a product followed two simple principles. One, take the cost price of a product, add a profit margin to it, and sell. Second is to closely monitor your competitors and put a price tag lower than theirs. However, eCommerce pricing models are not simple like that anymore. Modern eCommerce pricing strategies are revolving around the perceived value of a product than simply putting a price tag to it. But how will you understand the customer’s perception of your brand and your products? Read on to understand more.
Gather as much knowledge from customers
The decisive factor of value-based pricing model is always your customers. You need to go deep into customer analysis to find the perceived value of at least a set of your products. You can make use of your analytics data for customer segmentation and to understand their specific interests. Once you have a clear customers segments that you are targeting, you can go ahead and create customer personas. You need to gather really deep insights to be as specific as possible to create customer persona. These personas that you create should represent a major share of your customers.
Once you create relevant customer personas of your store or brand, you need to analyze their buying patterns and approaches. You need to go through their preferences in terms of products and features, and understand what really leads to a purchase decision. Just before a purchase decision somewhere lies the price perception factor. Unfortunately, you really can’t simply rely on behind-the-scenes analytics tools for this. You will have to conduct surveys to understand how your customer base perceives your products’ value. For the former part, you can read this article to gain more insights on eCommerce specific analytics tools.
Research on customers’ interests
Demographic information about your customers such as age, gender, location, etc. is easily accessible through your Google Analytics reports. However, you might need to go way beyond that to understand the specific likes and dislikes of your customers regarding your products. You may want to know the specific reasons your customers are motivated to buy your products. Understanding their concerns regarding your store or products too will help you improve your sales. You may even need to understand the preferred mode of engagement of your most important customer personas. This will give you a real edge if you are resorting to personalized pricing options to customers.
But how will you get your customers to participate in these kind of surveys and research schemes? Here is a great tool that you can try out
WooCommerce Points and Rewards
You can use a tool like this one to motivate your customers to buy more and engage more with your store. This extension helps you create a reward system for customers engaging with your store. Your customers can accumulate reward points and then avail a discount for a future purchase. You can fix the discount rate for store points as per your liking (one point can be one $1, or 100 points can be $1).
With the help of this extension, you can define a point system globally on your site based on the specific action a customer does on your store. The actions, which are by default integrated to this extension are users registering on your site, and leaving a product review. However, you can incorporate other actions provided by market research plugins (those compatible with the Points & Rewards extension). You might be able to find some good plugins for your market research here.
Or, if you are really good with coding, you can create a plugin of your own to incorporate these actions. Here is an article that you can take as an example to customize the Points and Rewards plugin.
You can purchase the Points and Rewards extension from the WooCommerce marketplace at prices starting from $129 (for a single site subscription).
An analysis of competitors too can help
Analyzing the customer base of your competitors too can help a long way in your pricing decisions. Pricing experts warn against simply fixing a price based on your competitor’s. However, you can analyze a lot of information that works well for your competitors. You can learn how your competitors are acquiring customers and backlinks. The customer engagement strategies they are adopting might be applicable to you too. Information like which all social media channels provide the best results for customer engagement might be too valuable. Also, if you have a similar set of products as your competitor, understanding their customers will do a world of good for you. This is especially relevant if you are just starting out with your online venture.
Alexa is a great tool that you can use for a detailed analysis of your competitors.
Basically, with competitor analysis, you will understand what your target market is willing to pay for your products. That will give you a solid base to start with, and you don’t have to really put a lower price tag. Instead, you can closely watch what additional features or experiences the customers are expecting. This would probably help you offer that with even with a higher price tag. It can be anything from free shipping, or faster shipping, easy returns, or a simple feature. Once you are able to identify and provide a value addition in the market, you can confidently move on to the specifics of your pricing strategy.
Derive at the optimum price for each product
From a survey conducted on your most important consumer base, you can get the products and features they value most. From this data, you can directly go to how the pricing of that product affects their purchasing decision. You can present a price range from very low to very high, and find out where your customer base stands at. This may not be always the mean or average value that one would naturally assume. Based on your customer base, it can be anywhere in the range. For example, your customer range might be preferring a premium quality product at a premium price. Regular discounts and focus on lowering the price might only help to drive them search for more sophisticated options.
That’s is the reason why at the start of this article we said it all depends on your customer base. How well you know them will decide on the best pricing strategy that you can adopt.
Dynamic pricing
We have seen how to get your fundamentals right in offering a value-based pricing model on your store. Another very effective pricing strategy that has gained a lot of attention in eCommerce industry is Dynamic pricing. Here is a quick look at some of the obvious advantages of dynamic pricing.
It gives you control over your sales and profits
Basically, dynamic pricing is a pricing model that thrives on the demand and supply pricing model. In simple theory, when demand is high, your customers will be willing to pay more money on your products. This is especially true in the case of tie sensitive industries like hotel or travel bookings. If you see, there will be seasonal surges in demand in these sectors and businesses are always able to reap more profits. And, the customer is almost always wiling to pay the premium without really losing the sense of value.
Though dynamic pricing strategy is perceived in time sensitive industries as an option to charge more, the reverse can also be true. That means a seasonal drop in prices, which, with the help of the right set of tools, can be an every day phenomenon too. The fundamental idea of this in general eCommerce is that there will specific times in the year, week or month, where prices will be low. Capitalizing on the same psychology of users, you can keep your prices mysteriously dynamic. This way, you are really not compromising on brand value either. Though you may have to establish yourself in the market, before embracing dynamic pricing completely.
As a WooCommerce store owner, you have to find the best tool that will help you with your dynamic pricing strategy. Here is a popular tool that you can rely on for your online store.
ELEX Dynamic Pricing and Discounts Plugin for WooCommerce
With the help of this plugin, you can easily apply dynamic pricing and discounts on your store at multiple levels. You can offer adjustments in pricing at product, category, cart or combination levels. These adjustments will be based on the rules that you set in the plugin settings page. You will have total control on the rules that you set, and the plugin has a feature to make sure the discounts won’t exceed the threshold value.
Let’s take a quick look at some of the useful features of this plugin:
Dynamic offers
The plugin helps you set up discounts on your products at different levels. You can use product, category, weight, price, etc to set a specific discount. Similarly, you can use cart parameters, product quantity or product combinations to set a discount.
BOGO
‘Buy one get one”offers are quite easy to set up with this plugin. It also helps to automatically add the free product to the Cart, when the customer selects the applicable product.
Personalized pricing
One of the most desirable features of an eCommerce store is to offer personalized pricing to its customers. You can build customer loyalty and repeat purchases pretty easily this way. This plugin allows you to give special rates to your loyal customers based on:
- their email ID
- user role
- number of previous orders
- lifetime order value
Complete control over the rules you set
The plugin gives you deep control over the rules you apply. You can exclude specific products from a discount rule that is applied to its category or cart in general. In a scenario where multiple rules can be availed, you can set the priority. Similarly, you can change the order of execution of rules by simply dragging and dropping them.
You can purchase this plugin from XAdapter marketplace at prices starting from $69 (for single site license).
Conclusion
How you price your products is a big factor in yours online store’s success or failure. Traditional pricing models such as adding a margin to cost price or competitor-based pricing are taking a back seat. Consumer-centric pricing is something preferred a lot by modern business. This model focuses on the perceived value of your product among your strongest consumer base. It helps you understand how much your customers are willing to shell out to buy a product from your site. Hope this article was clear enough to help you understand the advanced WooCommerce pricing strategies.
