Perhaps not everyone is familiar with the Good-Better-Best approach in business, but we have all experienced it as customers, no matter where we shop. Booking a plane ticket? You’ll have to choose between Economy, Economy-Premium, or Business. Pumping gas? Your options are Regular, Midgrade, or Premium. It is an easy concept to understand, and many businesses across various industries are using this approach, while others are still not offering tiered pricing. The G-B-B strategy has many advantages, and if done right, can bring a lot of extra revenues.
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Whether you have experience in online sales or not, you probably know that pricing is often one of the most important criteria for the customer. Of course, we all like a good deal, but pricing also affects our perception of a product. We previously talked about low-cost pricing and premium pricing strategies. But pricing is more complex than that, and getting the price right is one of the most important things in maximizing sales and profits. Different businesses have different products, customers, and competitive environments, so they need the best strategy for their business. Let’s talk about the seven main pricing strategies that apply to Ecommerce and online sales.
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If you shop online, I’m sure you’ve been there: you find an item you really like at a decent price, you add it to your cart, begin checking out, and find out that shipping will add an extra $7 to your bill. What an awful surprise. The idea of paying for shipping greatly upsets you, and you give up on your purchase. Does this sound familiar? I’ve certainly done that many times. In the age of Amazon Prime, should other online businesses offer free shipping? Is charging for shipping a thing of the past?
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Premium means more than just good quality.
I remember going out with this girl a couple of years ago. She was really into fashion and always wore a stylish outfit. In a conversation, she was very excited to tell me that she was carrying her rare Louis Vuitton purse that day and the story behind that purchase. I know absolutely nothing about fashion, but I know these are not cheap. Sure, her purse looked good. But why was she so excited about it? Was it because of a unique design? Or extremely high-quality materials? What justifies the four-figure price tag?
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The difference between penny-pinching and true low-cost strategies
Happy New Year to my readers! I know it’s been a while; I took a short break from writing during the holidays (and after getting a bad case of Covid), but I am excited to be back with more content.
Over the last few weeks of 2021, I wrote about economies of scale and discussed ways for businesses to improve their bottom line. Of course, every company wants to lower their costs to either improve their profits, pass savings onto their customers to gain market share, or for other reasons. But some companies are going further and excel at reducing costs: these are the successful adopters of low-cost strategies.
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My name is François, I’m the author of this blog. I love writing and talking about business and ecommerce. I hope you enjoy my work, feel free to contact me for any suggestion!