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Essential Ecommerce Pricing Strategies to Boost Revenue

Creating a pricing strategy for your ecommerce venture can pose challenges, especially for new sellers. A common mistake, proven to be harmful to online businesses, is haphazardly slashing prices in response to competitors.

As a prudent seller, it’s important to understand different pricing strategies to steer clear of such errors and ensure the success of your ecommerce business. To provide you with a competitive edge, this article discusses some highly effective pricing strategies tailored for your ecommerce enterprise.

How to Create an Ecommerce Pricing Strategy

Creating an effective e-commerce pricing strategy is crucial for attracting customers and staying competitive. Most shoppers don’t start their research right before making a purchase; they spend time comparing the best prices across different websites. A well-crafted pricing strategy not only influences search engine optimization (SEO) and comparison engines but also draws savvy shoppers to your site.

While there are popular pricing strategies, there’s no one-size-fits-all approach in e-commerce. It’s essential to understand your target market and choose a strategy that aligns with your business goals. Choosing a pricing strategy goes beyond profit considerations; it also shapes how customers perceive your brand—whether as a discount retailer, a high-end brand, or something in-between. There are diverse e-commerce pricing strategies to suit various business models, and combining a couple of them can enhance your overall appeal.

To start, closely observe customer behaviors and online shopping habits, collecting data on how people prefer to browse and buy. Utilizing analytics software can help identify key customer traits, and a digital operations platform can measure the success of your chosen pricing strategy.

Refine Your Ideal Customer Profiles (ICP)

Constructing a hypothetical description of the kind of company you wish to sell to — encompassing factors such as company size, revenue, industry, and geographical location — provides a foundational understanding of your target market. This ensures that your pricing strategy is not only aligned with the current needs of your customers but also future-proofs your business against evolving market dynamics.

Identify Ideal Traits

Focus on customers who are not only ready but also likely to buy your product, considering both their desire for the product and their financial capabilities. Market data becomes a crucial resource for new e-commerce ventures, while mature businesses can draw insights from existing customer lists, ranking them based on value and loyalty.

Research Your Target Market

Utilize data from both successful interactions and negative feedback. Understand the commonalities among your satisfied customers and the areas that might need improvement. Actively seek customer feedback on why they value your services and use this information to refine your ideal customer profile.

Build a Behavioral Profile

Utilizing gathered data, create a comprehensive profile detailing the needs, responsiveness, and emotional connection your ideal customers have with your brand. Incorporate preferences, such as communication channels and social media usage, to establish a clear picture of your ideal customer’s environment, pain points, and requirements.

Solidify Your Unique Selling Proposition (USP)

In a crowded marketplace, where differentiation is challenging, identify and articulate what makes your brand or product stand out. This unique selling proposition (USP) serves as a powerful communication tool, demonstrating to customers why they should choose your brand over others. Whether it’s handcrafted goods, limited-edition items, or a commitment to an ethical supply chain, your USP should be a distinctive element that resonates with your target audience.

Study Customer Behaviors

Analyzing buying habits and the factors influencing purchasing decisions is crucial. In the rapidly evolving digital landscape, where customer behaviors are subject to constant change, understanding the demands for speed and efficiency is imperative. Leverage psychological pricing tactics, such as setting premium prices just below round numbers, to influence customer choices and perceptions.

E-commerce Pricing Strategies

Competitor Pricing

This strategy involves setting prices based on what your competitors charge. It’s simple and low-risk, but it might miss out on capturing the perceived value your customers have for your products. Utilizing apps like Prisync can help automate price adjustments in response to changes in competitor pricing.

Value-Based Pricing

Favored by many e-commerce analysts, this method sets prices based on the perceived value of your products by customers. It often results in higher markups and is ideal for businesses with long-term goals. Effective for brands with differentiating qualities, like sustainability, and those with a loyal customer base, such as sellers of luxury goods. However, it requires extensive market research and analysis.

Price Skimming

If your product is innovative or unique, consider starting with a higher price and gradually lowering it as more competitors enter the market. This strategy helps maximize revenue when competition is low and remains competitive as more similar products emerge.

Penetration Pricing

This strategy is the opposite of price skimming and works well for new brands entering a competitive market. Start with low prices and gradually increase them. Use discount codes to attract new customers and build brand awareness, but be cautious, as it may risk damaging your brand reputation.

Bundle Pricing

This involves selling multiple products for a single price, often using strategies like upsells, cross-sells, or buy one, get one (BOGO) discounts. While it can boost sales volume, improper execution may reduce profits.

Psychological Pricing Strategies

Also known as charm pricing, this involves setting prices just below round numbers, like $19.99 instead of $20. This tactic, dating back to the 1880s, has shown to have higher conversion rates. Techniques include reducing prices by one cent, offering installment payments, and using anchor pricing. A/B testing helps merchants determine the most effective psychological pricing strategies.

Choosing the Right Pricing Strategy

Define Your Objectives

Your pricing strategy should align with your brand vision and future goals. Determine if you aim to boost profit margins, increase average order value (AOV), retain current customers, attract new buyers, or manage excess warehouse stock. For international expansion, consider region-specific pricing strategies.

Know Your Customers

Understand your market demographic, their values, and if they’re willing to pay. Tailor your pricing based on customer insights to set the most suitable prices.

Consider Hiring a Pricing Analyst

Scaling an ecommerce store goes beyond competitor-based pricing. For a growing business, think about bringing in an ecommerce pricing analyst. They can help assess production costs, analyze market behavior, and monitor competitor prices.

Key Considerations for Crafting an Effective Ecommerce Pricing Strategy

Developing a successful ecommerce pricing strategy goes beyond merely comparing prices with competitors. Business owners and online store retailers should take into account various factors to ensure a robust pricing approach.

Costs of Goods Sold (COGS)

COGS is a crucial factor when determining your pricing strategy. It encompasses all direct costs associated with producing and delivering your products, including labor, materials, and shipping fees. Accurate calculation of COGS is vital for establishing the minimum selling price that covers costs and ensures profitability. Use an online COGS calculator or the formula: (Beginning Inventory + Purchase) – Ending Inventory.

Profit Margin Goals

Profit margin goals should align with your business objectives and the competitive landscape. Set realistic profit margin goals considering factors like COGS, operating expenses, taxes, marketing, target audience, and business size. Determine the minimum price required to achieve your profit margin goals.

Competitive Landscape

Analyze the competitive landscape to understand competitors’ pricing strategies and product offerings. Gain insights into their pricing methods and adjust your strategy accordingly.

Seasonal and Market Trends

Consider seasonal and market trends when deciding on a pricing strategy. Identify optimal times to adjust listing prices for increased sales and maximum profitability. During peak shopping periods, like holidays, you might raise prices to capitalize on heightened demand. Conversely, in slower months, consider lowering prices to stimulate sales.


Boosting your eCommerce business success requires careful consideration of your product pricing. The listing price plays a crucial role in how online shoppers perceive your offer, indicating the value of your product.

Setting the price too high may discourage potential customers, while setting it too low could raise doubts about your product’s quality. Hence, selecting the right pricing strategy is vital, considering factors like your product, target audience, and competition.

It’s important to note that relying solely on a pricing strategy isn’t enough. To achieve optimal results, it’s crucial to complement pricing tactics with other effective marketing strategies.