In an age where information can be accessed instantly, it’s all too common for customers to pull out their phones in stores to see how the prices on the shelves compare with competitors’ prices.
And, as more brands develop custom pricing strategies for different sales channels, savvy customers are even beginning to compare how a business’ prices differ in-store vs. online.
Getting multichannel retail pricing strategies right is a challenge, but one with a payoff: retailers that effectively price differently across all channels see bottom line growth of 2% to 5%. Here we’ve outlined some of the key considerations and tactics of pricing across multiple channels.
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A product’s price isn’t the only consideration for customers when making a purchasing decision. There are a number of other factors involved, such as its availability (can I get it now or do I have to wait?) and its convenience (can I shop online or do I have to make a trip to the store?). With that in mind, sophisticated pricing strategies should take these other considerations into account, rather than simply trying to offer the lowest price on every channel or using your cost price as the be-all-and-end-all for calculating prices.
For example, in comparison to other shoppers, Amazon Prime members were found to be more accepting of online prices being higher than in-store prices. It’s speculated that this is because Amazon Prime members value the convenience and speed of shopping online more than the average consumer.
Getting the price right is a fine art, and testing and learning is a key component when implementing a pricing strategy that works. Business decision-makers should continuously monitor and optimize prices based on what works and what doesn’t for each sales channel, taking into consideration factors such as the following:
Keep in mind that those factors could be very different from channel to channel, so there’s no one-size-fits-all multichannel pricing approach. Being agile and tracking performance by channel regularly will help you define pricing boundaries and maximize profitability.
In the brave new world of multichannel pricing, it’s crucial to make sure customer service team members are trained on how to communicate with customers who inquire about differing prices online vs. in-store. The aim here is to avoid responses like, “It must be a mistake in the system,” or “I’m not sure – I’ll just give it to you for the lowest price.”
When a customer has a query about pricing in-store, on the phone, or via chat, customer service employees should be aware of the price differences and equipped to explain the reasoning (the cost of holding stock in a retail store is higher than selling it online, for example). Like the pricing strategy itself, responses should be tested and refined based on what customers are asking and how satisfied they are with the explanation.
As we’ve touched upon, there’s no one-size-fits-all pricing strategy that’s going to achieve the best results for every business. Honing a successful multichannel pricing method takes research and ongoing refinement. As a starting point, though, take a look through the best practices for retail pricing strategies, and download our free pricing strategy eBook for an in-depth look at business pricing.
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