What is the best practice around pricing strategies for online retail?

For the new year, I am reevaluating my prices. I am looking for suggestions on the best practices in online retail. Do I raise the prices and offer free shipping? How do I determine if my customers are price sensitive? Thank you!

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If you're selling the same thing as other companies through the same distributor, then your customers are pretty much guaranteed to be price sensitive. Most of your customers will know how to use Google shopping to filter products by price, and you should assume that most of them are smart/frugal consumers.

You can drop your prices to the bare minimum to show up at the top of the product search, but you'll have to be careful not to violate map pricing guidelines if you have distributor or manufacturer agreements. Many companies actually violate map pricing to generate more sales, but this may hurt you in the long run when developing relationships with your suppliers. What you really want to do is sell by volume, so you'll have to compete strongly by price.

If what you're selling is produced in house or is a unique product or service created by you, then you have much greater control over your pricing. If this is the case, free shipping is a great idea because it reduces price objections by eliminating the added costs, and making the shipping cost seem inclusive in the order.

If you create a high enough value for your unique product or service, your customers may be willing to pay a premium cost. You'll want to determine your market fit by checking to see if anyone else has created a higher value for a lower cost than what you offer. If so, you can optimize your pricing by increasing the value of your offer at a lower price than your closest competitors.

Hope that helps


Find out what your competitors are dong for price and price accordingly with the understanding that customers will expect a certain price. Also what do you think the upper threshold of value is for your products? you can use that to determine price as well.


If you have several products within a category, you can tier your pricing to set a mental anchor with consumers. So, let's say your main product (80/20 lens here) is $20, you could create 2 other pricing structures with less features ($15) and one with more features ($30). The highest priced product essentially creates the thought that "wow, I can still get all of these features even at the $20 level and I don't really need feature ABC, so $20 is a great deal." I know that's kind of a silly example.

You could also consider bundling products to create new and more profitable price points. Consider complimentary products or create a limited time package to get rid of excess inventory, if that applies.


Design algorithm with the respect of your product and with the respect of your competitor e.g
(material price+stitching or labor + transportation+utility build+marketing+profit)=total price

Anonymous User

From experience, anything over $9.99/mo is too big a leap for most people. $99/yr is okay. So that gives an idea of how much stuff costs versus repeat purchase or purchase with purchase versus it's a keeper factor.


keep changing prices to identify the attractive price range to use it as a guide. Adjust your prices to reflect the environment periodically or as and when required. That's my practice.


Hi Carrie.. I will identify my top selling products and price them aggressively and not make much margins on them and the rest of the products i would keep it moderate to high..


I'm assuming you are talking about the UNIQUE products that you have - "chic yet functional cases for your laptops and other electronic accessories." Obviously if they are really unique, then you can't compare to the competition, because there is none! So, charge as high as you can while you can, because as soon as the big guys get into the market they will undersell you.

How high is high? First decide your target. Sounds like women in the working world and in grad school. Those in business would want something fashionable, sturdy and functional - a place for the mobile phone, pen, recorder, pad and other items that women need. They would also want to make a statement - I'm a strong confident woman in the working world. They would probably pay up to $200. A lesser model at $150 would be wise and a third for students at under $100. More likely they will last forever or until fashion changes.

I would also suggest different colors for the colors women wear. I'm sure they would not want a brown case to go with their black suit!

Good luck.

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