Competitive Pricing On Social Media
Social Media Commerce has become very popular lately, so the competition grows drastically by shorter periods of times. In one of our articles we discuss the Social Media Marketing strategies in more detail. Now, let’s review the pricing strategies that work well with this type of commerce. It’s tough to figure out what is the right price for your product, especially when you’re emotionally attached to it, but to work in numbers we will need some research.
What Is Competitive Pricing
This type of pricing strategy is market-oriented. To put it more simply, as accompany/brand you consider the prices of other companies on the market which have similar products as yours and via research you figure out the right number to choose. Or maybe it would be more correct to say-strategically correct price. It also depends on your communication and how you present your product to the target audience quality wise. The same principle goes for pricing of services.
Three Pricing Basics
In the pricing strategies, we have three basics:
- Low Pricing-Serves setting prices lower than your competitors.
- High Pricing -Serves setting prices higher than your competitors.
- Matched Pricing-Serves setting prices almost similar to your competitors.
Tricky Pricing Analysis
As companies, you might not have the luxury of changing your pricing too frequently just to analyze the results. Sales are quite difficult to play around with. Especially, considering the fact that you have a base of loyal customers which will definitely notice, when the prices pop up and down all too often. With price analysis you figure out the reaction of your audience to these changes via creating polls for example. Of course it will show on repetitive purchase statistics as well.
Wrap Up The Product
Now, as we see-customers don’t really love constantly changing prices. So, here comes the question-what do we do to figure out profitable pricing without losing the customers’ trust? You could try wrapping the same product in a different skin and selling it for a different price and see if a customer prefers the old or a new version of the product. Don’t forget, that selling quantities are just as important. You don’t want to have only a couple of items sold instead of a dozen. Losing the customer base simultaneously.
Over And Under Pricing
Brands tend to make huge mistakes by over and underpricing their products. This can lead to the sales collapsing into dust. We don’t really want that to happen. So, how do you know when you’re crossing the red lines of too much and too little?
Keep in mind, that depending on your brand’s voice and target audience, certain products can seem too unaffordable or too cheap to be true. There is something you can call the “Defeated Mindset” when it comes to underpricing.
The brand thinks that the customer will resort to cheaper options even if they offer a high-quality and well-marketed product. This is where underpricing happens and the product just seems too good to be true for the given price, which raises suspicions about quality and fails to sell.
Another mindset which happens to be due to lack of analysis, pushes the brand to think only about high profits. In this case the team just doesn’t take into account the general income of target audience.
They start to think-it will sell even if the product costs more than my customers’ salary of a whole quarter of the year. Obviously the customer might get very upset about the pricing and resort to mid-priced products that work for similar occasions.
Bidding And Sales
To stay competitive on the market, sometimes a brand has to offer their customers a chance to buy high-end product in their range for more mediocre pricing. If your brand wants to be affordable (not cheap) sales or biddings are a necessary, part of your pricing strategy. Amazon giant and E-Bay are great examples of how well bidding and seasonal sales work. Even when the sales say “UP TO 70%” it still sounds like Christmas for the customer.
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