Or your product may have numerous accessories. For example, you might sell printers at a loss expecting to recoup profits via ongoing purchases of proprietary ink cartridges. Or it could be an inexpensive initial product that requires customers to make additional purchases for continued use. This could be as simple as offering a quality product that builds brand awareness and makes customers want to come back for more. In this case, you accept a profit loss in one area in order to acquire customers that you then profit from in other areas. Instead, you can identify the competitors closest in overall quality to what you have to offer, and then price your products lower than those close competitors.Īlternatively, you could offer certain products at lower prices as loss leaders. Your market segment might be flooded with cheap knockoffs of abysmal quality, and you wouldn’t want your products associated with those. You don’t necessarily need to have the very lowest price of any comparable product. You may be able to offer lower prices without losing profit or sacrificing quality by taking advantage of economies of scale. When you price your products lower than the competition, you appeal to budget-conscious shoppers. While there are many variations of competitive pricing strategies, they may broadly be grouped into three types: pricing lower than the competition, pricing higher than the competition, and pricing equal to the competition. In this article, we’ll examine the different types of competitive pricing strategies, and then we’ll look at the pros and cons of using them in ecommerce. Different competitive pricing strategies may price products lower than, equal to, or higher than the competition.Ĭompetitive pricing can be an effective strategy for preventing loss of market share and increasing profits. There’s always that one person who treats a friendly round of Mario Kart like the Indy 500, or pickup basketball like game 7 of the NBA Finals, or the company kickball game like there’s a million-dollar payday at stake.Īnd while being overly competitive in most aspects of life doesn’t usually yield the rewards the effort suggests, there are times when being a little competitive and strategic can pay off big for your ecommerce brand-especially when it comes to pricing strategy.Ī competitive pricing strategy is one in which brands price products based on comparable competitors. Chances are, we all know someone who’s a little too competitive.
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