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Importance of Product Pricing and Effective Pricing Tactics for Your eCommerce Store

The following is a guest post by Seller Snap.

Price is one of the essential factors considered by consumers when purchasing online. Since eCommerce sites and sellers abound online, the online retail marketplace has become highly competitive.

One of the avenues through which online sellers can make quick adjustments to distinguish themselves from other sellers is through pricing. By adjusting the pricing of listings, sellers can engage more online shoppers while increasing sales conversions in the process.

Online entrepreneurs should understand that online consumers’ perception of price differs from that of traditional consumers. One of the reasons for such a different perspective is the presence of price comparison.

It has become easier for online shoppers to decide whether to purchase a product or not because they can easily compare the product price of one listing to another. Hence, it is crucial to offer a competitive product price to consumers.

This article will discuss product pricing and some compelling ways to achieve a competitive price.

Importance of Product Pricing

Product pricing has a considerable influence on the purchasing behavior of online shoppers. Here are some of the reasons why sellers should properly manage and optimize the prices of the products.

Creates First Impression

As a component of the marketing mix, the price can stimulate sales. Lowering the listing price as part of a sales promotion can encourage more engagement from online shoppers and increase sales.

Price is one of the most important aspects of sales promotion. Hence, it should be managed and appropriately optimized; the price should not fluctuate too frequently.

Crucial Element of Sales Promotion

Price is one of the most important aspects of sales promotion. Hence, it should be managed and optimized properly; price should not fluctuate too frequently. Lowering the listing price as part of sales promotion can encourage more engagement from online shoppers and increased sales.

Generates Revenue

Product pricing is considered the only element that directly generates revenue for the business. Therefore, proper management of listing prices can dramatically impact the profitability of your eCommerce business.

In some cases, raising the price is more effective than selling more products. However, sellers should also consider other critical factors such as supply and demand, cost inflation, and anticipatory pricing before implementing any decrease or increase in the product price.

Competitive Edge

Price is the most flexible among other marketing mixes: Price, Place, Promotion, and Product. It means that adjusting product price and noticing results is faster than the other P’s of marketing. Changing your price to a competitive price point creates a competitive advantage over other online sellers.

Product Pricing Tactics You Can Implement

Experience-wise and based on the discussions above, the product price plays a critical role in the buying decision of consumers. Online shoppers, in particular, are always looking for reasonable prices, which is why product price comparison is common in the retail eCommerce industry.

To give you an advantage when it comes to product pricing, here are some product pricing strategies you can incorporate into your business to help increase customer engagement and sales conversion.

Competitive Pricing

As its name would suggest, competitive pricing is the setting of the product price based on what other sellers are charging. This type of strategy is strongly dependent on research, for you will have to know your competitors in the market and how they price their products.

Sellers who will be implementing a competitive pricing strategy need to perform a pricing analysis for them to build a map of the current price trends. After determining the price trends, sellers typically choose to go higher, lower, or match the existing competitor’s price.  

Adjusting your product price can be an uphill task if you have multiple listings and numerous competitors. For that matter, sellers immersed in a highly competitive market like Amazon utilize automated Amazon repricers to adjust their listing price.

AI repricers will automate price adjustments to achieve a competitive price point for your listings. These price adjustments are based on competitor’s price changes and overall market behavior.

With the automated repricing, you can save time and resources from all the research and analysis necessary for a manual price adjustment.

Price Skimming

This type of product pricing tactic aims to maximize profit margin during the early stage of product release. Implementing this pricing strategy means initially charging the highest price for your item and then lowering it over time.

The target shoppers for this strategy are top market segment buyers to which your product appeals the most. Implementing this strategy also means that your product will less likely have immediate or direct competition.

This type of pricing method is often used by top brands like Apple and Samsung for their flagship products that are in demand. They simply lower the price of the said products over time to penetrate lower levels of the market.

However, since price skimming necessarily alienates other market segments in the initial stage of product release, crucial elements must be considered before implementing this pricing strategy. Some of these elements include, but are not limited to the following:

  • Must have a huge number of loyal customers
  • The expected sales volume must be high
  • Unit cost is not an issue
  • Must not have immediate competition capable of undercutting the price


Another effective product pricing approach is discounting. It is a commonly used method, especially on highly active platforms like Amazon. Amazon sellers offer Amazon coupons and discounts to entice shoppers to carry out the purchase.

However, offering a discount should be appropriately managed by online sellers. Offering a massive discount on your products can affect customers’ perceptions. Customers might easily view your product as a cheap and a questionable option.


This product pricing strategy is the opposite of price skimming. If you offer a premium price for your product in price skimming upon release, the penetration tactic starts at a low price.

Implementing a penetration pricing strategy means offering a lower price point for your products to gain a sizable market share before other sellers can catch up. Once you have gained a decent number of loyal shoppers, your next move is to raise the price of your items.

Beyond Product Pricing

Product price is not the only factor consumers consider when purchasing an item. However, it is an essential factor that drives consumers to buy a product.

Accordingly, competitive pricing is an important consideration for 80% percent of consumers, which is why price optimization and implementation of various pricing strategies are crucial for a successful online business.

Moreover, to further increase the success of your eCommerce business, you should not solely focus on product pricing. Other aspects of the retail eCommerce industry such as marketing campaigns, inventory management, customer support, operations, and data analytics should likewise be examined and improved.

About the Author

Junel Ayala is a writer at Seller Snap. Over the past years, he has been engaged in project management, SEO content writing, and local SEO marketing for various firms in the United States and Europe.

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