Keystone pricing is a widely used pricing strategy in retail and ecommerce businesses. It involves setting the selling price of a product at twice the cost of the product. This strategy is popular because it provides a healthy profit margin for the seller, while still being perceived as reasonably priced by the consumer.
In ecommerce, the use of keystone pricing can help online retailers remain competitive in a crowded marketplace. By setting their prices at twice the cost of the product, online retailers can ensure that they make a profit on each sale, even if they are offering competitive prices. This can help to attract customers and increase sales, as customers are more likely to purchase a product that they perceive as being reasonably priced.
In retail, the pricing approach is often used as a baseline for setting prices. Retailers can use it as a starting point, and then adjust the selling price based on other factors, such as market conditions and competition. This allows retailers to remain competitive, while still maintaining a healthy profit margin.
Another advantage of keystone pricing is that it can be easily calculated and applied to a wide range of products. Retailers and ecommerce businesses can use this pricing strategy to quickly and effectively price a large number of products, without having to spend a significant amount of time on each individual product.
Five ways in which keystone pricing can impact pricing of ecommerce and retail:
Simplicity: The pricing method is easy to calculate and implement, making it a simple pricing strategy for retailers to use.
Consistency: The pricing method provides consistency in pricing across products, which can make it easier for customers to compare prices and understand the value of a product.
Profit margin: The pricing method allows retailers to make a profit while remaining competitive.
Managing costs: The pricing method can help businesses manage costs by providing a standard markup that can be used to price products.
Setting prices: The pricing method can be used to set prices for a wide range of products, making it a versatile pricing strategy.
Keystone pricing is a strategy that sets the selling price of a product at twice the cost of the product. This strategy is popular in retail and ecommerce as it provides a healthy profit margin for the seller and is perceived as reasonably priced by the consumer. Keystone pricing is easy to calculate and apply, making it a popular choice for businesses looking to quickly price a large number of products.