Ecommerce, E-tailers & Internet Firms Pricing

Challenges in Ecommerce Pricing

The exponential growth of E-commerce across the retail environment globally is creating opportunities to gain valuable insights into their product assortment and pricing mix not only at a category but also at an individual SKU level. Pricing in Retail/E-commerce has long been one of PriceBeam’s primary areas of expertise. Creating SKUs is important in ecommerce for various reasons like eliminating inventory management errors , improving store merchandising and enhancing the shopping experience, as well as boosting profits and improving vendor-merchant communication. Retail/E-commerce companies benefit from price optimization more than any other industry, but at the same time, it is often an incredibly challenging task. When pricing individual SKU´s it is invaluable to take into consideration various aspects of the products in question such as the product purchase date, cost and storage information, and the unique number of products. Only as little as 12% of consumer brands have a winning pricing strategy. Thus, the demand for our services in this industry is high and consequently, we have grown in expertise with the many projects we have done.

Ecommerce Pricing

Our solution makes it easy and affordable for retail/Ecommerce to base their pricing on data rather than costs, competitors or guesses. Not only does this make the firm more profitable, but it also offers invaluable consumer insight which can help optimize product development, too. PriceBeam has worked with companies from a broad range of industries, and we apply the best practices from all industries when we help retail/Ecommerce companies optimize their pricing. In that way, we continuously improve and innovate our current pricing method, making sure it stays ahead of the game and is adjusted to prevailing industry trends.

  • Price Positioning & Strategy
  • New Product Pricing
  • Market Launch Pricing
  • Assortment Optimization
  • Value Communication
  • Price Increase Implementation
  • International Pricing
  • Promotional Optimization

Price Positioning & Strategy

Setting the overall price position against other products in the assortment, or against competitors, is always a key challenge in FMCG / CPG.

If you need to price a product (or service) in a new market, it makes all the difference in the world if you understand customers' willingness-to-pay. 

Demand / WtP curves like the ones above, show the optimal price point where the curve peaks. In this example, the best price to optimize quantity is 10, whereas the optimal price for optimizing revenue is 15. 

In the old days when research was expensive, this could be difficult to get through a corporate approval if launching in many markets at once. These days, with cost-effective research options from e.g. PriceBeam, the cost of getting these crucial insights should no longer be an issue.

Price Positioning

New Product Pricing

Understand consumers' willingness-to-pay for new products, and use such insights to optimize prices when launching innovative products.

New Product Pricing

In retail/E-commerce, innovation is crucial for many brands. It is quite common that 20-30% of all products sold are recently launched. Companies spend many millions in launch marketing and advertising across multiple channels. However, they often struggle to set the right price. With PriceBeam's price research, you can test different concepts and communication strategies before launching, and understand consumers' willingness-to-pay for those options. This provides solid facts and improves the likelihood of success of the launch, when launch prices are aligned with value perception of the consumers.

Market Launch Pricing

Setting the right prices when launching into new markets is often a challenge in FMCG/CPG companies. PriceBeam helps understanding market differences and setting optimal price points for each.

Market Launch Challenges

It is extremely important to align price to market and retail landscape. If the market is fragmented with multiple brands and SKUs competing against each other, companies will have to set a more aggressive pricing strategy to grow their market share. If the market share is consolidated by competitors who own a high percentage of market share of all SKUs, then the pricing is mainly set by these competitors.

Market Launch Pricing

Value Communication

Understand the benefits and features that consumers value as well as those attributes that don't impact consumers' willingness-to-pay

Value Communication & Pricing

While overall willingness-to-pay is a useful start, for really professional new market pricing, the next step should be to break down the willingness-to-pay into the individual value drivers. For what features or benefits are customers willing to-pay, and how much.

A good method for understanding the individual value-drivers is to use choice-based conjoint analysis. In this type of research (see e.g. PriceBeam's solution), respondents are shown a set of product choices. He/she then chooses his preference and is shown a new set of choices with other configurations; and again; and again. Through the choices it is possible to determine how much value the respondent puts on the individual features. The outcome: a series of value-drivers and the value potential customers put on them in the new market.

Price Increase Implementation

Prices should not be static. Quite the contrary, it is best practice to adjust prices upwards regularly, at least in line with competition and inflation, but often also higher thanks to brand innovations.

Quite often overlooked when pricing a market launch is what happens next year. Or the year after? Make a plan for how prices should evolve over time in the new market. Do you start high and then gradually lower the price as the product matures or becomes obsolete? or do you start low and then introduce price increases? 

The answer should really lie in what the expected willingness-to-pay is over time. In most businesses and industries, it is likely to be a more solid strategy to start high and then over time reduce the price is necessary. This is often associated with human psychology, where it is easier to accept a price reduction than a price increase. Especially start-ups get this wrong, where they value themselves too low to begin with, and then struggle to increase prices later. But also big corporations get it wrong from time to time.

Price Increases

International Price Management

Prices vary across countries. Understand differences in willingness-to-pay per market and set prices accordingly.

International Pricing

Actually, in most industries there is a marked difference in prices between countries. This for a good reason: customers are willing to pay a higher price in some markets than others. So while it can in certain instances be tempting to introduce a single, global price to simplify IT systems or manage customers who exploit price differences, the upside and benefit from differentiated pricing around the world is significant. So don't fall in the trap of harmonizing prices. 

PriceBeam market research can be run seamlessly in 109 countries around the world, with results ready and comparable in less than a week. Use our cost-efficient research to monitor WtP and optimize prices globally.

Assortment Optimization

Use market research to understand the differences in willingness-to-pay across all items in an assortment, and optimize both prices and range.

How many products or services in an assortment, and their individual prices, are challenges faced by many brand managers, product managers, or customer insight executives. PriceBeam's willingness-to-pay research can reveal how customers see the indivudal items in the assortment, and how they would choose between them.

Solve different pricing challenges:

  • Test willingness-to-pay a premium for brand extensions.
  • Determine the ideal number of items in the assortment
  • Test price anchoring effects
  • Understand willingness-to-pay segments/groups.
Assortment Optimization

Promotional Optimization

Understand consumers' potential reaction to different promotional mechanisms or discount levels, and optimize the overall revenue.

Promotion & Discount Optimization

Discounting and promotions are prevalent in most industries. Running a promotion or giving a discount can, when done properly, deliver incrmental sale or help gaining access to new customers. With PriceBeam's Willingness-to-pay research you can quickly research what your customers really are willing to pay for a product or service in a given market.

Solve different pricing challenges:

  • What promotional mechanisms work well and what don't?
  • Predict customer choice based on promotions offered.

How Does It Work?

PriceBeam’s solution conducts extensive market research, collects and analyzes data before delivering a detailed report on your customer’s willingness to pay. This data will enable you to stick out from the competition, maximize profit, and set prices that aid your long-run brand positioning.

Define offering & target market

You describe your product/service on our cloud-based platform. You also define the target market to research.

Create Market Research

We add all the research details, statistical setup, etc. so you don't have to worry about it.

Conduct Market Research

We collect responses about the given product/service in the defined target market.

Analysis & Results

The results are aggregated, analyzed and presented in our cloud-based solution.

Why You Should Choose PriceBeam

PriceBeam delivers strong value on a number of fronts, which is why our clients choose us.

Scientific Results

PriceBeam's studies ensure statistically significant results about willingness-to-pay.

Fast Insights

Results as fasts as 48 hours in B2C and 1-2 weeks in B2C.

Immediate Value

1% change in price delivers 11% improvement in value for the average company.

Easy to Use

You define the product and target market. PriceBeam takes care of the research and statistical details.

Global Reach

PriceBeam studies can be run in 109 countries. PriceBeam takes care of the localization.

Cost Effective

Using cloud technology, PriceBeam studies cost a fraction of classic, old-fashioned market research.

Further Reading

Willingness to pay

Learn how to use WtP when optimizing prices in consumer goods industries.

Read More

Lifecycle Pricing

Differentiated pricing strategies from cradle to grave of the product lifecycle.

Read More

Brand Health

Assess the brand's health through willingness-to-pay research. Do you have pricing power?

Read More

High-low pricing

Supporting the pricing strategy of high-low prices, supported by market research facts.

Read More

Price segmentation

Segment the market and determine willingness-to-pay for each segment. Exploit insights into consumers willing to pay a premium price.

Read More

About Us

With a methodology that is confirmed to be accurate in thousands of projects, PriceBeam provides self-service market research to companies of all sizes that quickly, accurately, and affordably discovers your customers’ willingness to pay for your product or service.

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