Ecommerce Web Design Blog

Whether you are selling online or offline, pricing your products is a key part of doing business.  What methods can you use to price your online products? Here are a few tips you may wish to consider.

Some common methods to price products include:

• Cost-based pricing (also called cost-plus pricing. this is the price that you paid for an item plus a mark-up)
• Market-based pricing (what your competition is selling items at)
• Value-based pricing (what your customers value your products at. You may apply a premium to reflect your brand, to depict quality or the value of your product in the marketplace)

In practice, the price you place on your products will often depend on a combination of the techniques above.  There are also many different strategies that you can use to price products depending on your objectives in the market.

For example, if you are a new business online you might run an introductory sale, you may have some products of popular items priced equal or below the competition to get people to your store and other products priced using value or cost-based pricing. 

Some  online businesses also use a technique called a loss leader of pricing one product below cost to match or better competition, to get people into your online store and looking around. If they buy that item and you can cross-sell it with others, you could build up a sizeable cart and make a profit overall, even if one item is sold at a loss. 

Whatever you do, make sure you look at the prices of your products as a whole and not only individually, as it will depend on your competitors, your products, your shopping cart website, your advertising and your brand as to whether customers will be prepared to pay your prices.

If you are looking to start selling online, finding the right sub-market for your products can make the difference between a store with average performance and super-success.  In slower economic times with intense competition, some time spent on finding a maket niche for your products and services is time well spent.

So how do you determine your niche? Here is a quick checklist of ideas to get you started.

• Look by supplier:  try to find a supplier that nobody else is using. If the market is flooded with products like yours someone selling your product in a unique way could really appeal to your target customers. When evaluating suppliers always try to put yourself in your customer's shoes: what would they think or feel about this product.
• Look by competitor: review all of the products and services of your competitors. What features and benefits do they have? What things are missing? Do they cater to all segments of the market? Just because a particularly profitable segment is full of competition does not mean there is not room for you if you have a unique selling proposition to that market. For example, a shape that hasn't been seen before, extra service, a different way to pay for the product, being bundled with something else.
• Think about what you are passionate about. An angle or unique spin on your products that you are passionate about will show up in the way you market your products. Customers are very good at telling the difference between marketing waffle and a passionate description about the particular benefits of your product (and why they should buy it online from you)
• Make sure you choose something that you are knowledgeable about. Especially if you're up against tough or well established competition, solid knowledge of the ins and outs of your product will help you stay on top of your product as well as in dealing with customer questions from your website.
• Look by keyword. Think about what customers search for and optimise your site on those keywords. If it is a phrase that has been overlooked by your competitors, even better.
• Look by packaging. Could you package the product differently or more innovatively than it is now?
• Look by channel. Is there a product already well established in the market but you can deliver it in a more innovative way? e.g. could you dropship it to lower your costs of holding stock and offer sharper prices? 
• Could you sell it wholesale instead of retail? Or vice versa? What are your competitors doing there?
  
• Research, Research, Research. As in any business venture,  make sure you thoroughly understand the market, whether there is sufficient demand for your product and any legal or technological barriers before getting started. Make sure you create a marketing plan, and have the best shopping cart software for your website too.
  

Above all, stay passionate, stay focussed and turn your niche market into a success. Don't let competition stress you out. Relax, have fun and let your personality shine out in the marketing of your product. The more others compete with you, the more it validates that your niche is a good idea!

However unique your product or service mix, chances are that you will have some sort of competitors either already strong in the market or emerging. Ensuring your website business is as successful as possible means 'benchmarking' against them to work out whether customers are likely to buy from them or from you. 

Mystery shopping, visiting your competitors and observing what they do can all be useful tools in improving your own online performance. 

We do NOT mean you should copy off your competitors as this is not original and customers will see through it. What's more it is a fast way for your shopping cart software provider to close you down for breach of copyright - or even worse be in front of the ACCC or Commerce Commission for unfair trading or 'passing off'.

But you can learn a lot from your competitors without copying them and use that information to improve and refine your own product offering. Here is a quick checklist:

1.  Do a search on Google for the key words that are used in your industry. Note if you see any results for their business and if they have any 'sponsored link' advertisements pointing to your competitors. This will give you an idea of where and how they are promoting their website.
   
2. Visit their website - keep a spreadsheet every month with your key competitors and what promotions they are running (along with your comments about them). Over time you can review this spreadsheet to draw some conclusions about their marketing strategy and promotional success (or lack of it)
3. Read their product descriptions
4. If your products are not specialised and expensive put in an order to your competitors. See how they treat you, how they package their products, whether they keep you informed about your order and the quality of their products. 
5. Time how long it takes to load pages on their website. Do they have lots of high resolution product images or ones that are more suited to websites. What would your customers think of this?
6. What is missing from their product offering? If you were them what would you be unhappy about? Can you provide it?
7. Ask your web ecommerce company for a competitor report. They may be able to tell you more about who links to them and how they are performing on the keywords that are important to you
8. ... and so on.
   

This is just a list to get you started. You can see the technique that is being employed: look at what they are doing and use that information to improve your own offering.

But remember: Don't waste too much of your time worrying about what your competitors are doing. You need to devote as much time as possible to your own products and service. Competitor reviews are intended as a complement to your activities to help you refine your strategy - they should not be an end in themselves or else you will not have the time to get on with your own business.

For a wary online consumer, one way to assess whether an ecommerce website is safe and secure to purchase from is to look at whether the site is kept up-to-date.

A well designed website that has a good selection of products, an easy-to-use checkout system, an active newsletter and is obviously well maintained is more likely to inspire confidence in the buyer that the products they order from you will be of high quality and actually get delivered to them.  Keeping your shopping cart website up-to-date by reflecting seasons and events (such as Christmas, Chinese New Year, Valentines, Easter,  etc) and sending out a regular newsletter to your subscribers/customers can therefore be a big influencer in whether your customers keep buying from you.

At the start of each year, mark on a calendar or in your online diary your planned promotions, events and seasonal messages for the year.  Allow your sales,  promotions or seasonal messages to run for at least two weeks prior to each event to allow people to find you and buy from you during your sale period.  For big sales, you may need to run them for four weeks to get maximum benefit. Each promotion will depend on the time of year, what you sell and your industry - there is no set formula.  Also, make sure you stay aware of what your competitors are doing as they will probably be keeping track of you.

 

Sending your customers (and potential-customers who have signed up with you)  a newsletter may seem like a chore to write and send, but it is a powerful marketing tool that should not be underestimated.

ozCart shopping carts have a newsletter facility built in, which allows customers to "opt-in" (choose) to receive a regular newsletter from you. You can use your newsletter to keep your customers up-to-date as well as inform them about special offers and other promotions. If a customer has said they want to receive your newsletter it is not an invitation to bombard them with offers. It is an invitation to send them relevant and useful marketing promotions. Remember, they can opt-out at any time so it is your challenge to make sure that what you send them they will want to read and take you up on.

So what should you do?  The rule of thumb is don't push your product. Think about what your customers would find useful. Put yourself in their shoes. What would make you want to buy? What information would you find useful?

If you were selling children's toys, some useful articles you could include in the first few issues of your newsletter could be:

• What's "in" this year for Children's toys?
• Christmas sale specials
• Report from the 2008 European Toy Fair - toys coming up
• Interacting with your children and their toys
• Toys and child psychology
• Comments on ununsual or interesting international articles about toys
  
• .... etc.

One place to get great content for your newsletters is Google News. This has a lot of articles from online newspapers around the world. If there is something interesting you could write a comment on it or rework the article in Australian or NZ terms. What does it mean for us here?

Treat each newsletter as a mini magazine or newspaper. It must be short, interesting and relevant too.

When you are creating your newsletter and need Osc Works to develop you a newsletter template then you can put in a support ticket to our sales department and we would be happy to give you a quote.

Merry Xmas and happy newsletter writing.

Related Article: Getting started with your newsletter