Price matters. Most people know that you get what you pay for, but it’s still hard to resist the allure of low prices. As a seller, you want to make the most profit you can. This usually means putting as high a price as you can without sending your customers screaming for the door. The same applies for online retailing.
However, striking the right price point is not only about putting a decent markup over your costs. You also have to account for the competition. If another retailer is offering the same product or service at a lower price, you are likely to lose business. Competitor price monitoring software can help you find the sweet spot in your pricing.
Is it worth the trouble?
Yes. Some retailers believe that consumers are willing to pay more for quality. That is fine if you’re the only one offering a product or service. In most cases, however, people will compare prices for similar products and services. It was true back in the day, and it’s truer today.
People buy by price. There is no escaping it. If you want to run a successful business, you need to know what you are competing against. In some cases, a 2% difference in price will not matter much, especially if you have a good reputation as a seller. However, if you can offer a product or service at 10% less than your nearest competitor can, you pretty much have the sale in the bag.
Does it mean taking a hit?
No. Pricemanager.com says competitor price monitoring software is a source of information, but it’s not a rulebook. You don’t have to lower your prices all the time to beat the competition. If the prices of your competitors are lower than your cost, then obviously it doesn’t make sense to lower your prices. It may indicate that your supplier is overcharging you, however.
Alternately, it may mean your competitors don’t know what they’re doing, so you will not have to worry about them for long. Price monitoring gives you an idea of what the marketplace looks like. You still need to weigh the pros and cons of matching the lowest prices. In some cases, you may have to take a much lower profit margin than you want to sell in bulk, but it all evens out in the end.
Can you just use a better marketing strategy?
Maybe. Some retailers do manage to convince people to buy from them because they have a better reputation, but that is rarely the case. You may be spending more on branding and marketing than you should. It may be a better plan to lower your price a little rather than spend more on promotions.
Retail e-commerce is very competitive. You need to know what your competitors are doing, to plan your moves better.