Common pricing strategy mistakes made in ecommerce and retail

The most common e-commerce pricing mistakes made by managers


As a business manager, you need to avoid making common pricing strategy mistakes and decide the right pricing for your product that supports its unique value proposition.

Reaching that decision may be a complicated process involving qualitative and quantitative market research and taking into account any mistakes made along the way.

Wrong pricing can harm your business performance and send lucrative opportunities to your competition.

Price elasticity is an essential quantitative aspect of determining your pricing strategy. Misinterpreting or miscalculating it, or completely overlooking it can harm your pricing decisions and affect your bottom line.

Calculate your products' price elasticty with a free calculator

Pricing Dashboards for Pricing Analytics

We’ve outlined some of the pricing strategy mistakes that managers make, and suggestions for what you can do instead

1. One Price Doesn’t Fit All

Some companies price their products too low in fears that they’ll lose out on buyers if they charge more – but this means that they don’t make as much revenue as they could’ve.

Making tiers and then setting a premium for the value of the product is a better approach. Both over and underpricing a product is detrimental to your bottom line.

Overpricing can discourage customers from buying a product because they don’t see the value in it.

Underpriced products, on the other hand, may seem “too cheap,” and customers opt for the more expensive alternative in the hopes of getting better value.

Businesses need to price a service or product at par with the perceived value – price elasticity calculations can help enterprises to find this worth.

2. You Don’t Review Prices Often Enough

Managers often think that because the business is profitable, they shouldn’t disrupt the market with a price change which can result to another common pri

However, sometimes it is necessary to rock the boat not because you’re making losses, but because customer buying patterns change – the same goes for their income, inflation, and cost of production.

All these factors need to be taken into account in addition to calculating price elasticity for your product to determine the right pricing point.

A good rule of thumb is to review prices and cost structures at least once a year– changing these even by a small fraction can have a considerable impact on your bottom line.

3. Price Beating Policies Don’t Always Work

Predatory pricing – or even comparative pricing  – doesn’t always yield the results that you’re after.

It is crucial to understand that lower-priced products won’t necessarily attract more buyers. This strategy is guaranteed to work only in situations where competitors offer exactly the same products with no differentiation.

But thanks to the extreme competition in today’s markets, differentiation is not a luxury; it’s a necessity. Buyers are smarter and can be suspicious of very cheap products, and telling customers to compare can change buying behavior instantly.

If you’re still going for lower prices than your competition, it would be in your best interest to tell your customers why your prices are lower. Tell customers what allows you to provide better quality at a fraction of your competitor’s cost.

Learn more about e-commerce pricing

All things e-commerce pricing & price optimization right in your inbox. No spam.