10 Oct 2014

The Pricing Challenges in eCommerce

Finding the right price for your product or service could be the difference between making a profit or not making a profit. It could also be the difference between surviving as a company and not surviving as a company or small business.

In this economic crunch, since 2008, it has been challenging to identify that sure-fire way of continuing to make a profit, and part of that lies in the way that products and services are priced. This is especially true when it comes to internet pricing in the eCommerce online world.


Difference Between Online Shopping and Traditional Shopping

There is a difference between online shopping and traditional shopping, with a trip to the store.

Picture this: You are shopping in a store and you notice something that you really want to buy. Are you going to write down the price, walk out of the store (leaving your cart or shopping basket), drive to another store or two to check prices, and then come back and buy it? That is unlikely. Granted, it would not be unusual for you to pull out your smart phone and check amazon or other sites to see if they have a better price, so that you can order it when you get home. I am guilty of doing that myself on many occassions. But, internet aside, if you are in a hurry, it is unlikely that any of us would spend the time or gas money to drive all over town for something that only costs about $10 to start out with, and we would find ourselves making that impulse buy, even if we could have saved a buck elsewhere.

When it comes to online, it is too easy to compare prices and price shop and actually choose a different site even for minimal savings, with the thinking that it all adds up eventually. Hey, add free shipping in there and a store may have a new loyal customer.

Pricing has always been important and something that is studied in colleges and universities, but it is becoming that much more important in the age of the internet.

How To Price

In anticipation for this article, I spent time researching. I was also inspired by a recent review that I did (more on that, below). The whole concept of pricing can get complicated (online or offline). Do you like math? Check out this flash presentation, covering concepts of pricing, from Havard.

I actually love math, so that was not a deterrent, personally. However, no matter how much one loves math, it is easy to run out of time. I mean, I could get lost in some fun math equation and never really get around to finding the right price for my product. And, if I have thousands of products, that is going to take a lot of time that I don’t have. I want some sort of tool that does the analysis for me and then spits out (like a calculator), the price that is right for my products or services.

There is definitely a science to pricing. There is a great article on entreprenur DOT com (with simple formulas) for calculating the price and how that impacts the entrepreneur.

There are many applications and services out there that will do the work for you, so you don’t have to do it. So, this week I reviewed the service provided by Wiser. Their product is called WisePricer. Before I reviewed it, for myself, I guess I didn’t realize that there were applications or services that were so *complete* to their approach to pricing. I was so used to the manual, Harvard approach.

Using WisePricer as an example, I was able to see the value in real-time analytics on pricing, and how this could become essential, especially to an eCommerce site. Their service uses a proprietary dynamic pricing engine to facilitate the analysis. In this case, WisePricer analyzes your pricing, as well as the competitor’s pricing to identify that sweet spot. Also, if you offer your products to others for resale, this service will help to identify the pricing that the distributors are using on your product.

Why Should I Care?

Ok, good point. If you are not out to make a profit, or you are insulated from the need to price your products or services in a way that benefits you financially, then this topic doesn’t apply. If you are a manufacturer and using online tools and sites to sell that product (eCommerce), then this pricing approach (whether it is through a service, application, or the manual Harvard method) is a need, if you want to survive. If you are somewhere in-between, it is nice to understand pricing. Even if you only have one product or service, you still want to price it in a way that you make money, but not inflate your price to a point where people walk away 99% of the time and you make no money at all.


  1. Marty Pospischil October 15, 2014 at 12:14 PM

    This is agreat post, Deborah. Of course, in the build up to opening your business (as a start-up), you should always be aware of what your competitors are charging customers, and why.

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