The field of Magento web development is gaining momentum each day. Setting up an online store is easy. Problem arises when it is the time for the first few sales. A lot of factors affect the sales; one of which is price of your products of course!
If you belong to the group of people who think that setting price is no big deal, you are at the right place. If you think all you need to do is think of a suitable amount for that product and it is done, you have landed up on the right page. Well, optimal pricing is extremely important and it is an art, as interesting as science. It plays a huge role in the success or failure of your eCommerce business. There are some basic pricing strategies which you need to understand before setting the amount to any product. These tactics will help you do both at the same time; increase your profit as well as improve the client satisfaction; creating a win-win situation for both.
The magic of number 9 – The psychology!
Don’t underestimate the power of number 9! Yes, the power of psychology rules here and the research has shown that the price amount ending with 9 sells the most; whether it is the business market and consumer market; be it a 99 cent chocolate or $29,999 car. As per the study and research, the products with price ending with 9 sell 24 percent more than the rest. For example: If the price of a product is $10, you might end up selling 20 pieces and if its $9.99, you might end up selling 25 pieces. Those 5 people bought more not because of the $0.01 price difference, but because of the mind set of customers.
Our minds work in that way now! If the product is worth $399, the customers’ minds think taking the left most (first) digit into the consideration. So, they will associate that number with $300, and not with $400, irrespective of the number to which the actual price is closer to.
It is all about the perceived value – The prestige and admiration!
There can be times customers know it is too much to pay, but still they pay! Why? They do it because of they know the perceived value will be much higher and it is going to bring a lot of happiness to them. Well, you can set up such high price only to those products that are unique for your store. If you keep high price for products that are no different than others in market, people will not purchase them.
The key to portray such products is to get amazing product images, customer reviews and branding. The high price will work when there is emotion attached with the product. There should me some story behind it; it must be not just a physical product, but an experience! Also, you can bundle it with extras like 24×7 customer support, money back guarantee and 12 months warranty!
Simple mathematics – The profit calculation!
The best trick to set price of any product is to calculate the cost incurred to get the product right from producing and packaging to shipping, tracking and delivery and then add 20 percent profit it is generic product and 50 percent of profit if it is your own product of your own brand.
This strategy works the best when you have large amount of products and a lot of SKUs for new products to be priced regularly.
These three tactics will help you set the right price for your products. So, make sure you keep them in mind while pricing your products, so as to boost up the sales like never before!
