Every eCommerce company aims to build a sustainable and profitable business. To do so, they should focus on their pricing strategies. Every business, large or small, can benefit from finding new ways to optimize product pricing. But this doesn’t happen by simply assigning a monthly price list to the whole catalog. On the contrary, when it comes to pricing, merchants should get as creative as possible with their marketing efforts, because different pricing strategies can dramatically affect their bottom line. Here are three very clear reasons why every eCommerce company should always test and optimize their prices.

1- There’s always room for improvement—or a price increase

Every eCommerce company faces competitors that are ready to swoop in and welcome customers who abandon carts on your site for a better deal elsewhere. But this doesn’t mean you should engage in a “race to the bottom.” While you may lose some shoppers to competitors who slash prices, you are likely to win new customers who are more interest in a loyal relationship than a one-off sale. Consider focusing on shoppers who already prefer your business and are likely to continue buying from you, even if your prices are slightly higher than what they might find elsewhere.

Many eCommerce companies play the best-deal game too aggressively. They end up with prices that are so low, even a 5% increase isn’t likely to impact the performance of their best-sellers. This is an opportunity to test a price increase. Using specialized software, companies access an overview of what their competitors are charging for key product categories. Armed with this intelligence, companies can make precise decisions regarding small price increases that allow them to remain competitive. Ideally, you’ll find a balanced price that brings in more money for each item sold, while still maintaining a “best deal” position that attracts buyers.

2- Lower costs to increase profitability

Prices and costs are on opposite sides of the profitability equation.

In eCommerce, costs regularly fluctuate. A product’s unit cost is determined from a multitude of factors that change over time. The major share of the unit product cost in eCommerce is the supplier cost, in other words, the unit sales price on the supplier side. The remainder of the unit cost comes from marketing spend and overhead costs for staff, facilities, etc.

Supplier costs are a big deal for eCommerce companies of all sizes. Deciding on supplier cost generally comes down to two factors: purchase volume and negotiating power. The first is rather simple: the more you buy of a product, the less each individual unit costs. However, negotiating power is more fluid and depends on many factors, like the company’s market position, the state of the retailer-supplier relationship, whether it’s long-standing or newly established, etc. ECommerce companies should aim to lower unit costs by managing these two variables as smartly as possible.

Marketing budget and overhead costs also change over time. It’s worth putting energy into optimizing them because they will directly impact the final unit cost.

3- Your competitors are changing their prices all the time

One of the most important competitive forces in eCommerce is pricing. Online shoppers around the world love a good deal, and they won’t hesitate to drop one company for another if they find one.

So while eCommerce merchants should avoid price cutting themselves into a corner, they still need to work out a competitive pricing strategy. Finding what this means for each market implies keeping an eye on the competitive landscape, and assessing how pricing decisions will be felt by customers.

Keeping prices constant, instead of changing them to reflect market movements, puts companies at risk of losing out on profit opportunities and new customers. But doing this intelligently requires competitive pricing knowledge. One of the best and most affordable ways to gain insight is to use an automated competitor price tracking software that suggests price change decisions as soon as they become relevant. The flexibility that automated competitor price tracking and monitoring software brings translates to more frequent opportunities to maximize profits. Smart price adjustments made based on competitor insight can be a powerful tool for eCommerce companies to remain competitive and profitable.


ECommerce is a competitive landscape, but companies who seek to understand their competition will see it become a strength rather than a threat—start by building a competitive pricing strategy.

About the Author

6SmartCompetitivePricingTactics_4Burc Tanir is an SMB-loving, eCommerce evangelist and the CEO of, the competitor price tracking software, already serving companies from more than 40 countries.




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