OnDemand WTP Pricing Research

Pricing by Performance: It’s time to stop the race to the bottom | Tamebay

Chris from Chris Turton Ecommerce is an ecommerce and marketplace consultant passionate about understanding how online businesses tick. He writes from experience and tries to answer questions from sellers to improve and share his knowledge. Today, Chris shares his experience of pricing by performance to maximise margins.

Pricing by Performance
So, your competitor is beating you on price, your immediate reaction is to match or even undercut them. That may not always be the best strategy and Pricing by performance is a better strategy

A common practise with marketplaces is to achieve sales velocity and position by being the cheapest in the results page and this is where the faithful repricer tool makes its appearance. This is not always the best strategy; Countless SKUs have shown that on eBay, products with the best match rank are ones which return the best for eBay. Many opinions by marketplace experts show that eBays’ “Cassini” and search ranking algorithm include product and buyer feedback, shipping, historical sales volume and conversion rate.

This structure is also the same in Amazon and other marketplaces. Price is one of the highest factors for acquiring the buy box on Amazon but is not the only one. The buy box does rotate on many items. expert opinions agree that shipping methods such as FBA (fulfilment by Amazon) or SFP (Seller fulfilled prime), seller rating and shipping time have a major influence on ranking.

One of my clients has a product that has sold over 2,000 units in the last 12 months and is 25% more expensive than competitive identical SKUs – some from bigger retailers, yet its sales velocity and rank remain extremely strong and within the parameters of what we want to achieve.

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Pricing by Performance: It’s time to stop the race to the bottom – Tamebay.

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