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Tag: Pricing

How to price products — 7 competitive pricing strategies to make a profit


Find the sweet spot

Knowing how to price products might seem simple, like just another task to accomplish for a business owner in the development phase. However, pricing a product is more than slapping on a price tag (or typing an amount into your eCommerce platform) — it’s a complex process that affects the overall success and profitability of your business, especially when it comes to eCommerce.

There are about 1.3 million eCommerce websites in North America (U.S. and Canada), and 2 to 3 million in the world (excluding China). That’s stiff competition for new and established eCommerce businesses alike.

Beyond creating and marketing a unique product, pricing will play a critical role in customer perception.

As an entrepreneur, you need to determine an appropriate price that your target customer is willing to pay, matches the competition, and still yields a healthy profit.

Related: How to start an online store in 3 steps

How to price products: 7 competitive pricing strategies

Use the following steps to establish a competitive pricing strategy for your eCommerce business.

  1. Know your local competition.
  2. Understand the online market.
  3. Assess all of your costs.
  4. Determine your profit margin.
  5. A/B test your pricing strategy.
  6. Recognize the perils of underpricing.
  7. Consistently review pricing strategies.

Are you ready to gain the insight you need for pricing products? Let’s dive in.

1. Know your local competition

Whether you’re a new business pricing products for the first time or an established business reassessing your pricing strategy, competitor research is invaluable.

It may seem counterintuitive, but understanding your local competition is also important.

While an online store has a global audience, consider that people in your local area can look elsewhere in the community, or might have personal ties to smaller, locally-owned brick-and-mortar businesses.

According to PwC’s 2019 Global Consumer Insights Survey, nearly 50 percent of consumers buy products in-store (excluding groceries), daily or weekly. Those who buy at physical locations use eCommerce to price compare. Up to 80 percent of shoppers who prefer in-store purchases still use online sites to research and price shop.

When developing your pricing strategy, understand the relationship between online and in-store pricing and shopping.

 

Today’s savvy consumer knows that eCommerce removes many of the hard costs of getting products to market, so they expect to see lower prices online. Take this into account when you research local brick-and-mortar competition.

How To Price Products African American Woman Shopping Online2. Understand the online market

Just like knowing your local competition, be conscious of your online competition, as well. Do some quick, informal competitor research of similar products.

  • Start a list or spreadsheet with your competitors’ price points. Make sure to notate product differentiators in relation to their pricing.
  • What makes your competition stand out?
  • What explanations do they give on their quality or unique characteristics that account for their prices?
  • Alternatively, if you find bargain or discounted pricing amongst the competition, why might that be?

Once you’ve accumulated a range of price points and competitor data, think about your product and your unique selling points (USP), and apply that to your pricing strategy.

Do you want to be a value player, a low-cost leader? Can you command a higher price than competition because of brand quality or features?

As of the third quarter of 2018, only 2.4 percent of online consumer visits converted into a sale, based on data from Statista.

In the saturated world of eCommerce, where competition is fierce, knowing how to price products in relation to the online market will increase sales and maximize profit.

Remember, your goal should be to model your competitors, not to copy them.

Use their pricing strategies as inspiration and then develop your own unique, product- and customer-based pricing models.

Related: How to find inspiration from your competitors (without stealing their ideas)

3. Assess all of your costs

When evaluating potential pricing structures for your eCommerce products, it’s essential to have a solid grasp on all costs associated with your business so that you can ensure healthy and sustainable profits.

In general, there are two types of costs:

Fixed Costs: These represent your hard costs that are unchanging; for example, the cost of hosting your eCommerce site, meeting payroll for any employees, leasing space for on-premise storage or offices and marketing. These are costs that do not fluctuate based on an increase in sales or production.

Variable Costs: These are costs that change based on production or sales volume. For example, your production costs might increase if you need more products, or perhaps the cost of materials lowers as your order more.

Gathering all of your data related to costs is an essential step in pricing your products.

 

Make sure to take your time. It’s easy to miss expenses (such as services you pay for annually or quarterly).

Once you understand your fixed and variable costs, you can perform a break-even analysis (detailed in the next step).

Bottom line: You need to understand what it’s costing you to produce products and run your business, so you can accurately price products to sustain and maximize profits.

Related: Small business expense planning for your new online startup

4. Determine your profit margin

Profit margin is the percent revenue you make on each unit after you deduct your fixed and variable costs per product.

For example, if you set the retail price of your product at $80, and it costs you $60 to make, then your profit is $20, which represents a 25% profit margin.

Average healthy profit margins tend to vary by industry.

As an example, for clothing, it ranges from 4% to 13%, based on recent data.

How To Price Products Business Flowchart

To determine a realistic profit margin, first, do a quick break-even analysis. This is where you determine the number of sales you need to at least cover your costs. Consider your fixed costs for the business and the variable costs per product.

From there you can adjust your pricing strategy accordingly to determine a competitive, yet optimized profit margin.

Your pricing directly determines your profit margin, and this is where you’ll have to factor in all of your research and knowledge. There’s no sense in undercutting competitor’s pricing if you can’t make a return on your investment, or even worse, turn any profit.

5. A/B test your pricing strategy

If you want to try out a few different pricing strategies, test them against one another in real time.

A/B testing, aka split testing, usually occurs in web design or digital marketing, but you can also use this tactic to help determine competitive pricing strategies for eCommerce.

Simply use different pricing structures at the same time on your website and see which yields the best results (or most sales).

You can A/B test your pricing strategies in two ways:

  1. If you have any type of digital marketing campaigns that funnel traffic to your product landing pages (like PPC, social media ads or email marketing), create two landing pages with different pricing, and equally direct traffic to each. After a set amount of time, see which product has the best conversion rate.
  2. If you have different products of a similar nature and price point, you can test pricing strategies on each. Then track sales and see if one outperforms the others.

Stuck on which type of pricing strategies to test? Quickbooks recommends these standard pricing models:

  • Pricing at a premium: Price products higher than your competition, then, market the value perception and unique features that constitute the premium price.
  • Penetration pricing: Generally used for new businesses or products that can afford to offer a lower price tag to steal attention from competitors. You can label this as a low-introductory deal that will increase as time goes on.
  • Economy pricing: Often difficult for smaller eCommerce businesses, this is basically setting prices low to attract the budget-conscious shopper.
  • Price skimming: For new, unique products you set prices higher, initially. As other competitors enter the market or interest wanes, prices gradually decrease — the opposite of penetration method.
  • Psychology pricing: Appealing to the emotion of a shopper by setting illusions of lower prices and better deals. For example pricing at $99 instead of $100, because customers might have a hard time spending past a certain threshold.
  • Bundle pricing: The offer of lower pricing, or a deal when a customer purchases multiple products — a type of bulk discount. Bundling works well if you have complimentary products to pair together, you want to move a specific, low-selling product, or your variable costs decrease if you produce more items.

Depending on your industry, select pricing structures for your products and test a few against each other on your eCommerce site. Then make a data-driven choice, based on sales, to determine the best pricing strategy for your business.

6. Recognize the perils of underpricing

How To Price Products Man With Empty Pockets

Something that may seem so simple, like how to price a product, is a foundational ingredient to your overall business health and viability. This is why it’s important to exercise caution when you’re trying penetration or economy pricing; in reality, you might be underpricing.

While it might be attractive to get the sales up front, underpricing can be dangerous to your ROI and bottom line.

Something else to consider: When you price products at the lowest possible point, not only are you diminishing your profit margin, but you also limit the possibility for adjustments.

What if you want to run a sale, or offer a discount? If you lowball your product, there’s no wiggle room.

What’s more, if you have a bargain basement perception, you won’t attract customers that value quality over cost. Recent data shows that 45 percent of global consumers in 2018 turned to local eRetailers for premium products.

Underpricing affects more than just your profit.

 

Nellie Akalp, entrepreneur and founder of CorpNet.com, has cautioned that “even though you might land the sale, underpricing your products and services comes at a cost. … Entrepreneurship is challenging enough without feeling like you’re underpaid and overworked. Charging too little can not only put a damper on your revenue potential, but it can also douse your enthusiasm for your business.”

7. Consistently review pricing strategies

You can’t have a set-it-and-forget-it attitude when it comes to pricing products.

Business owners and entrepreneurs must consistently asses their data, metrics and pricing strategies to ensure optimal sales and profit. Moving forward, you need to consider cash flow, sales history and changes in the customer market.

You can review and update pricing strategies at scheduled times, like once per quarter. However, the need for adjustment can be inconsistent. Instead, refer to this checklist of events that call for a review of your pricing structures:

  • Your costs change, (due to a minimum wage increase, changes in the cost of goods or new tariffs introduced)
  • The economy shifts (inflation or recession)
  • You notice that competitors change their prices
  • You launch a new product
  • You enter a new market or vertical
  • You have a high-performing product (for example, you’re regularly sold out, or you receive a celebrity or influencer endorsement)

If any of the above occurs, use it as an alarm to stop and evaluate your pricing strategies to make sure they’re still effective.

How to price products to maximize sales and profit

Pricing products is not an exact science, and it’s not an art form — it’s a dynamic, business-dependent strategy that can be challenging for even seasoned entrepreneurs.

Your decisions will depend on your particular niche, goals, products, industry and other factors.

Know that you’ll need to put in the time to research your market and competition. Crunch numbers on your costs to determine pricing that can maintain long-term product profitability. Analyze current business metrics and A/B test strategies to gather more data to bolster your decision-making. Be cautious of underpricing.

Finally, once you set your prices, know that it’s a living, breathing process that needs to be monitored and nurtured as your business and the market evolves.

 

With dedicated product pages, you can go in and change the price as you work through your strategy.

This article includes content originally published on the GoDaddy blog by the following authors: Francine Hardaway, Nellie Akalp, Andrea Rowland and Steffi Chen.

Image by: Kaitlyn Chow on Unsplash

Sitechecker Review: Features, Testimonials, Pricing, Coupon


Ranking at the top of the search results is something every website, blog, brand and business talks about. However, with only a few spots available on that elusive first page of Google for any keyword, it’s a whole world of competition out there fighting for the same thing.

This means, if you want to successfully rank higher in the search results, there is more than just content creation and link building tasks at hand. SEO is something that needs to be monitored, improved and in action every single day of the week.

In order for all of this to come together, site owners and brands must have a reliable SEO and keyword research and monitoring tool.

Today we are going to be taking a look at the Sitechecker keyword tracking and monitoring solution, while also highlighting it’s many features and tools, while also showcasing why it might be the ideal solution for your site.

Introducing Sitechecker Pro

Sitechecker is an all-in-one solution that allows site owners and brands to properly track and optimize the performance of their search rankings. In addition to providing users with a plethora of SEO rankings and reports, the solution also provides On-Page SEO checkers, Website SEO reports, SEO monitoring and more.

Right off the bat, I personally always like to look at the different rankings for so-called ‘SEO tools and solutions’ to see if they can actually rank for what they are preaching or promise to offer.

If an SaaS can’t rank for the most competitive terms out there (which they are competing for), what good are they?

After quick analysis, I was happy to see Sitechecker ranking on page one for keywords like “website checker”, “seo check”, “analyse seo”, “seo backlinks” and more.

Now that we’ve gotten that quick intro analysis out of the way, let’s take a look at some of the tools, features and reporting that Sitechecker has to offer.

Creating an Account and Your First Site Project

First thing first, you can sign up for a free account at https://sitechecker.pro/.

Right when you join the site, it’s an extremely simple and speedy process to get your websites and accounts set up for reporting and monitoring.

The first steps in this process is to add your site domain name, select your site audit and monitoring settings, adding Google Analytics/Search Console integrations, setting your Rank Tracker updates and reporting, and adding in your requested keywords and search phrases for tracking.

After this is done, the system will take 10-15 minutes to scan through your site and have your first keyword rankings report available. While this is going on, you will also see an active progress report for your site, what’s being scanned and what problem areas have already been targeted.

On the left-hand site of the members area, you will see a navigation bar to access each of your site projects, the main dashboard area, site audit reports, rank track tools and more.

Once the initial report is completed, Sitechecker will provide you with a full site audit, while highlighting the different areas of your site that could use some improvement.

By clicking on any of the sections on this report, it will provide you with a resource on how to address and fix each of the issues. An ideal score for your site is in the 80-90+ range, so be sure to fix any critical issues first, and then make your way through the warnings.

Sitechecker SEO and Keyword Rank Tracker Reports

As important as site reports and audits are, most users are going to be logging into Sitechecker daily to monitoring their keyword movement reports.

Using the keywords you initially added to your site during sign up (or that you can add at any time), the tool will provide you with easy to follow reports on where your site is currently ranking in the search results.

Click on any of these keywords or search phrases, and it will immediately pop up a new screen that displays the top ranking for such keywords, and where your competitors are ranking. This chart will also show a movement on rankings in the graph area.

The more time you spend analyzing your site and search rankings with the tools offered by Sitechecker, the more you will understand and benefit from the solution.

In addition to the main tools and features highlighted so far, Sitechecker also has On Page, Traffic and Rank checkers, while offering backlink and link strategy tools and recommendations as well.

And as seen in most of the screenshots, the option is also there to add the Sitechecker Google Chrome Extension, which makes reports, analysis and optimization even easier. This plug-in is currently being used by more than 30,000 users.

Online Sitechecker Testimonials and Reviews

As with any online solution or membership that you are going to invest your time and money in, it’s important to see what other sites and users of the platform have to say about it.

When running a search for Sitechecker in Google, we can see they have hundreds of positive reviews across sites like TrustPilot, Capterra, FinancesOnline, AccurateReviews, SoftwareAdvice and other reputable sites.

You can also visit the Sitechecker Facebook Page and see plenty of testimonials and reviews on there as well.

Sitechecker Pricing Plans

As with all great tools and solutions on the internet, the best ones are going to come with a price tag. The good news is, with SaaS on the rise, costs for extremely advanced and costly solutions are now more affordable than ever before.

That is exactly what you will find with Sitechecker as well.

It’s free for anyone to visit the site and create an account. However, in order to start using all of the features and access keyword reporting, you will need to upgrade to one of the plans below.

  • Basic: $19/month – 3 websites – 150 keywords
  • Startup: $29/m – 5 websites – 500 keywords
  • Growing: $69/month – 10 websites – 1,000 keywords

Depending on your site needs and budget, the Basic and Startup plans are the most popular, as they are quite affordable and allow you to add 3 to 5 sites to your account.

The option is also there to lower the monthly rates ever further, by signing up for a year in advance. This will result in a 20% savings.

How to Get the Most Out of Your Site with Sitechecker

As with all SEO, site audit and rank tracking tools, it’s important to find one that you are comfortable with, which is also easy to use. It’s also important to make sure it provides you with the necessary optimization, research and keyword analysis tools to continually make improvements to your site.

These are all key features and components that Sitechecker definitely already have in place.

With more than 30,000 paying customers on the site, it’s well worth your time to add your site and keyword rankings, to see what areas of improvement might be waiting for you.

Bonus Coupon Code: Save 20%

Use this coupon zacjohnson to get 20% off for the first payment of any plan (monthly or annual) at Sitechecker.

Local SEO Pay, Pricing & Performance


Local SEO pricing

One of the questions our wonderful Customer Success team receives most frequently is, “How much should we charge for local marketing?” Of course, as always, the answer is, “It depends”, but we hope the below information helps you benchmark your pricing against others. To note, for all of the financial-related questions, respondents were not required to answer.

Local SEO billing clients

Local marketers are most likely to charge clients through a monthly retainer, with 43% basing this on deliverables, and a further 22% setting the number of hours. Hourly rates and day rates are less common in the local SEO world, though may be a good marker for pricing retainers.

Retainer pricing by business size

Average cost per month for local marketing by business size

It’s important to consider how much pricing varies for different business sizes.

Consultants working alone charge clients an average of $766 per month, while larger agencies with more than 20 employees charging more than five times this.

If you work in a business and want to understand what local marketing assistance costs, it’s important to first consider what you want to achieve. If you require a close relationship with a small team, a smaller agency or freelancer may suit your needs. If, however, your business requires a higher time investment, a larger agency may mean more hours are up for grabs. For more, read our guide, ‘How to Choose a Local SEO Agency or Consultant‘.

Monthly minimum retainers

Local marketing minimum retainer cost

Not every client will be paying the same amount, and it’s likely that many marketers will have a broad range of costs among their clients.

While it can be useful to have a minimum in mind to ensure time is being taken up in the most valuable way, many local business accounts have the potential to grow over time. Starting out with a small budget and then scaling up can be a good way for marketers to grow clients, so be careful not to price potential high-billing clients out with a low minimum retainer.

Average local SEO costs per hour

Billable cost per hour for local SEO

While those who bill solely on the hour are rarer, most marketers will have an hourly cost in mind when pricing client work.

Agency marketers charge an average of $127 per hour, with freelancers charging closer to $100 per hour.

However, it’s important to note that these aren’t viewed as conclusive hourly rates that every local marketer should now charge. Many components affect pricing, including location, services offered, and experience – and these should all be factored into competitive costing.

Local SEO hourly rate ranges

When comparing the data to 2019’s results, there has been a notable increase in respondents who charge between $50 and $99 an hour.

At the other end of the scale, there was a slight increase in marketers charging more than $200 an hour – which could be reflected in the increased number of senior respondents this year.

The cost of reputation management

Average cost for reputation management services

Reputation management is an ever-growing facet of local marketing, but with this change comes the need for local marketers to upskill.

Respondents were asked for their monthly charge for reputation management – but, of course, this charge can come in many forms. Some will manage online reviews as an inclusive part of a wider retainer. Others may offer vastly different services that increase costs for clients, such as monitoring reviews across sites, responding to businesses’ customers, and generating more online reviews.

Likewise, different business sizes will require a vastly different approach to online reputation management – with a busy restaurant or hotel far more likely to require time-intensive reviews management than businesses with fewer customers.

There’s no one-size-fits-all approach to reputation management pricing. The first step should be looking at the business: which review sites are important for them and their competitors? How much work will be required to achieve a high star rating? And, is the business set up to generate a steady stream of reviews?

The cost of citation management

Average cost for citation management services

Respondents also shared how much they charge for citations. This was measured based on the charge for a new client as, for many, building and managing citations is a step to fix for a new client, and will not require much ongoing investment once key citations have been claimed.

The average charge for initial citation claiming and fixing is $389, with the median cost sitting at $200. Citations remain a key part of local SEO success, with 80% of consumers saying they would lose trust in local businesses if they saw incorrect or inconsistent names or contact details online.

Like with reputation management, the costs for citations can vary significantly based on the business’s needs. Some industries have more directory sites than others, while some businesses may already have built accurate citations in the places that matter. First and foremost, it’s important for local businesses to have the same citations as competitors to ensure the business is seen by potential customers in every place they may be searching.


Services offered by agencies and freelancers

Services offered by local marketing agencies and freelancers

Most Frequently Offered Services by Local Marketers

  1. GMB optimization
  2. SEO audits/analysis
  3. On-site optimization
  4. Reporting/analytics
  5. Citation management

In last year’s report, there were a great many services that were offered by most marketers. This year, there was a far lower rate of services offered, which should be attributed to respondents’ behavior answering this slightly amended question rather than a change in services offered.

Google My Business optimization remains important to local marketers (as it should be!) According to Moz’s Local Ranking Factors Survey, Google My Business signals make up 25% of local finder ranking factors. GMB is a key point of contact for many customers searching for nearby businesses – with 64% of consumers using Google My Business to find business addresses or phone numbers.

SEO audits, reporting, and on-site optimization remain critical to local marketing success. These core services were closely followed by citation building and NAP clean up, with 82% of local marketers offering this service.

While links are incredibly important to SEO success, only half of local marketers are offering link building as a service. Perhaps even more shocking for those that follow local marketing discussions closely, just 33% of marketers are offering Google spam fighting. Investing in these less-used (but time-intensive) tactics could really help move the needle for local businesses.

Common services offered by local marketing agencies and freelancers

There are many factors that help improve a local business’s online presence, but marketers don’t necessarily need to be providing every service for clients.

Agencies and freelancers tend to offer different services, with freelancers less likely to offer a broad range. Freelancers are far less likely to offer PPC, website design, and link building – perhaps preferring instead to focus and specialize on core services.

The most valuable local SEO services

Most valued local search tactics

Respondents were asked to share up to five tactics that they believe are the most valuable.

We know that local marketers and their clients can sometimes be at odds on which tactics are most valuable. Both marketers and businesses agree that Google My Business is incredibly valuable, while on-site optimization is also key.

Despite reviews managements only being offered by 2/3 local marketing agencies, it’s highly valued by both in-house local marketers, and external consultants. Maintaining a strong online review presence can be a big job, but can also be instrumental in affecting consumer behavior.

Interestingly, social media is far more esteemed among those working within businesses. It’s often expected for a business to have a social media presence, though, of course, some industries have more to gain here than others.

At this stage, it’s important to note that the respondents from local and multi-location businesses may be more likely to have good local marketing knowledge than the average local business marketer due to the skew of BrightLocal users taking part in the survey.

Best channels for winning new clients

Marketing channels to win new local SEO clients

Respondents could choose up to three options.

When it comes to getting more customers, word of mouth remains the outright leader. It’s clear that local marketers can spend as much as they like on promoting their business, but the best form of marketing is a happy customer.

Curiously, both SEO and PPC have dropped in importance among local marketers as a method for attracting new customers. This year, fewer respondents chose three options – could it be that word of mouth is all some marketers need to reach client capacity?

We’d love to hear how you connect with new clients – let us know in the comments below!

Beyond the billable

Easiest and hardest local SEO tasks

But, local marketing isn’t all building links and fighting spam, so we wanted to know which non-SEO tasks cause the biggest headaches.

Perhaps unsurprisingly, freelance and agency marketers’ most difficult task is turning work down. When building up your marketing business, it can be hard to say no to potential customers, even if it leads to sleepless nights. Getting new customers is also seen as difficult for 38% of marketers, so turning warm leads down can feel painful (though perhaps necessary for your own health!)

Additionally, 41% of marketers find building their own profile hard. If you’d like a little help, why not join our networking list of local marketers on Twitter?

It’s fantastic to see that retaining customers is one of the easiest among the above tasks. Great service and proven results will keep customers coming back for more, and hopefully, also recommending your services to their peers.

Staying on top of trends and educating customers seems to be a key challenge. Local marketing is changing all the time, and with so many different sources of local SEO knowledge out there, it can be incredibly difficult to stay on top.

Keeping on top of changes

Local SEO learning

Across agencies, freelancers, and local business marketers, the most common way to keep up with industry changes is through articles from local marketing tools and services providers, and in broad local search press. Check out our annually updated top blogs list for ideas on what publications to follow.

Testing is a critical way for SEO marketers to learn, with 57% in agencies, 48% of freelancers, and 42% of in-business marketers using this for their learning. The best marketers are continually trying out new things, and using insights from the industry to inform what they choose to try out for their businesses.

Local marketers use a great many different ways to keep up – from webinars, to local SEO forums, and real-life conferences such as LocalU.