Are The Low Prices Of Your Physical Products Hurting Your Sales?
Any eCommerce or brick and mortar business should always, and I mean always, test prices. If you are in sales, you may want to flaunt that you have best deal on a product or service, but in reality that is not always what the customer is looking for.
Sure, some people are looking for the rock bottom price on what they want, but this is not always the masses or the customer you may want to market your products to. Testing prices can reveal some very interesting insights and if you have been fiddling with A/B testing sales pages without manipulating your products pricing, you may be missing out big time.
Big Brands Level The Playing Field
Many brands will force their distributors to agree to never sell below a set price. This does a couple things, it stops price wars between their own distributors that drive their companies sales and it keeps the products perceived value at a premium. If you see Rolex, mark their watches down 50% off in one location on a special sale, you would never think about buying one anywhere else or at all if you keep waiting to see that great deal come around again. Maintaining a consistent pricing, builds brand loyalty to to the product not the store you choose to buy it from. Apple has built a huge business on this same concept.
Perceived Value Can Be Misleading
Quality does count to a point, but it is not everything. Their are plenty of Chinese phone companies that cannot bring the premium price as an iPhone, but some have great build quality and hardware. The biggest thing driving prices of iPhones is the perceived value of the public. The same goes with Nike shoes. They don’t cost 6 times more to make than other shoes, they just bring that much more when you get to the checkout isle. I know, these are loose comparisons, but I hope you get my point. Jewelry online is one of best examples.
You can certainly find a nice looking necklace on a boutique website selling for close to $20 and then find the same thing on AliExpress or Wish for $1. The necklaces are identical, but when presented on a fashionable website with a catchy name, again the perceived value is through the roof.
What Kind Of Customer Do You Want To Attract?
This is what price and product really come down to. You can sell a decent product for cheap and you can sell a cheap product for a decent price. How you choose to proceed from there, will determine the type of customers that you attract to your business. It is very important to understand there is a good way to bend the rules and if you are selling a junk item for $50 you will get nothing but complaints, both direct and on social media (which you cannot control) and bad customer experiences turn into a failing business or at least a struggling one fast.
Charging a premium price for a good product, is the winning proposition. Your overall sales numbers will drop, but many times even with less sales your profits will level out or possibly even increase. When your target market is a group willing to pay a higher price for a solid product and some “assumable” great customer service, you will find that you will less returns, less complaints and less friction in general. The reality is, that those people who are “bargain hunters” generally are fast to return an item if they find it somewhere else cheaper, quick to complain because they have unreasonable expectations at the price they want to pay and because money is obviously tight (or at least they treat it that way) are less likely to come back and become a repeat customer.
So Are You Loosing Sales Over Your Low Prices?
Of course, you are are the only person who can really answer this question. I urge every business owner to do the homework, go out there and do some price testing. Test different prices in different marketplace, run some ads that show price some that don’t and find out what your real selling points are. I think many will be surprised as to what their results from this type of testing will reveal. I also want to point out to those new in the eCom world, if you are struggling to make sales, lowering your price may get the ball rolling, but shrinking your profit margins to grow clientele is not always as sustainable as you may think from the loss-leader deals you see from the huge companies. Take your time, create a solid sustainable strategy and go get em!
Hope you enjoyed the read,