4 Pricing Strategies To Grow Your Retail Business
For consumers, price is one of the most important factors that determine whether they’ll make the purchase or not. That’s why, as a retail business, you should properly set the best price for your products. This means that you shouldn’t simply price your products higher than the total amount you spent manufacturing or acquiring them, which is a common mistake in pricing. Instead, the prices you set should be calculated and grounded on your business brand, identity, and financial stability.
With that said, it’s safe to say that prices are more than just setting a number. Your pricing can be a reflection of your brand’s identity, how you treat and view competitors, and how you value existing or potential customers. So, if you want to grow your retail business, keep these pricing strategies from the get-go:
Use CPQ software
Traditional sales operations dedicate a huge chunk of time to generating quotes and proposals and then following up on the potential customer. This method is a huge waste of time for the sales representatives as they no longer focus on making a sale. In fact, via this method, 35% of the sales rep’s time is allocated to setting the ideal price for customers.
Fortunately, CPQ (Configure, Price, Quote) software allows your retail business to accurately and quickly generate any sales quotes for your products. The quotes or estimates generated by CPQ software with e-commerce integrations follow a predetermined set of rules that already considers important factors, such as customization, optional features, discounts, quantity, and others. As a result, CPQ software will significantly increase sales representatives’ productivity as they’ll no longer spend most of their time doing menial and repetitive tasks.
With CPQ software, your sales team can attain the following:
- 10x faster to generate quotes
- 95% reduction waiting for approval
- 30% quicker to onboard fresh sales members
Manufacturer Suggested Retail Price
The idea behind manufacturer suggested retail price (MSRP), which is the strategy that most consumers are familiar with, is to set a standardized price for products sold across different locations. If your retail business focuses on mass-produced items, such as household appliances or consumer electronics, there’s a chance that you’re already using this strategy.
Furthermore, setting a price using the MSRP strategy means that you should consider the cost of manufacturing, prices of similar products, and the profit margin for both retailer and manufacturer. Hence, the manufacturer will provide the retailer with products that are half the MSRP, allowing the retailer to make a profit from the transaction.
Multiple And Discount Pricing
This strategy involves putting a discount if multiple products are purchased simultaneously––a consumer buys a pair of socks for USD$5, two pairs for USD$7, and so on. This strategy is attractive to customers as most, if not all, love the idea of discounts. Also, as a retailer, using this strategy will also allow you to empty your inventory, especially late-season items.
This pricing strategy is when retailers like you will set flexible prices based on market dynamics. This is particularly important as comparative shoppers are on the rise, especially as it’s already easy to access information these days. As a result, retailers don’t only have to set their prices competitively, but they must also consider essential factors, like competitor prices, demand, stock movements, and more.
One solution a retailer can take when using a dynamic pricing strategy is to leverage data-driven insights from software. Doing so will allow you to optimize your product’s price in real time as you can now take advantage of any movement in the market. Hence, as your retail business can change the price in real-time, you’ll have more chances of attracting customers in the e-commerce space.
Now that you know that pricing your products doesn’t merely involve setting a number that allows you to gain a profit, it’s vital to know the right strategy to use when pricing your product. As a retail business, you can either use multiple pricing strategies or stick to a particular one.
However, considering today’s competitive landscape, it’s crucial for you to be open to changes in your pricing. This implies that you must always be on the lookout for your competitors, the constant shifts in the market, and your target audience’s behavior. All of these reasons point to the importance of pricing software.
With pricing software in place, your products are always set at the right price, attracting and retaining customers. In return, your retail company will have a loyal following, which is a major factor in growth.