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.
Benefits of keystone pricing
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.