Product pricing is one of the important tasks of e-commerce product managers and operators, which directly affects the sales, profit and competitiveness of products. However, commodity pricing is not a simple matter, and it needs to consider a variety of factors such as cost, market, competition, demand, value, and psychology, among others. This article will introduce five common commodity pricing strategies, namely cost-plus pricing, competitive pricing, demand pricing, value pricing, and psychological pricing, analyze their concepts, advantages and disadvantages, and application scenarios, and give some examples and diagrams to help you understand and apply these pricing strategies. This article will also introduce a column on intelligent marketing, "Intelligent Marketing: How Big Models Empower Product and Operations Managers", which teaches you how to use big data and artificial intelligence technology to optimize your product pricing and other marketing activities. The purpose of this article is to enable you to choose and combine the right pricing strategy for different products and markets to build your e-commerce products.
Commodity pricing refers to determining a product or service to be traded in the marketplace. Product pricing is one of the important jobs of e-commerce product managers and operators, as it directly affects product sales, profits, and competitiveness. A good commodity pricing can attract more customers, increase the market share of the product, increase the brand value of the product, and enhance the profitability of the product. A bad commodity pricing can lead to a decline in product sales, a decrease in profits, a loss of competitive advantage, and even a failure of the product.
However, commodity pricing is not a simple matter, and it needs to consider a variety of factors such as cost, market, competition, demand, value, and psychology, among others. Different products and markets have different pricing strategies, and there is no one pricing strategy that works for all situations. Therefore, e-commerce product managers and operators need to understand and master the principles and methods of various pricing strategies, and select and combine appropriate pricing strategies according to different products and markets to achieve the best pricing effect.
This article will introduce five common commodity pricing strategies, namely cost-plus pricing, competitive pricing, demand pricing, value pricing, and psychological pricing, analyze their concepts, advantages and disadvantages, and application scenarios, and give some examples and diagrams to help you understand and apply these pricing strategies. This article will also introduce a column on smart marketing, teaching you how to use big data and artificial intelligence technology to optimize your product pricing and other marketing campaigns. The purpose of this article is to enable you to choose and combine the right pricing strategy for different products and markets to build your e-commerce products.
Cost-plus pricing is one of the simplest and most commonly used pricing strategies, and the basic idea is to add a fixed percentage or amount to the cost of a product as the selling price of the product. The advantage of this pricing strategy is that it guarantees the profit margin of the product, avoids losses, and is simple to operate and does not require complex market research and analysis. The disadvantage of this pricing strategy is that it ignores the demand and competition of the market, which may lead to the product being too high or too low, losing market opportunities, or reducing the sense of value of the product.
Cost-plus pricing is suitable for the following situations:
The cost of the product is stable and not affected by market fluctuations, such as raw materials, labor, equipment, etc.
The product has a high degree of differentiation, there is no direct competitor, or the competitor's information is not transparent, such as patented products, customized products, luxury goods, etc.
The elasticity of demand for products is low, that is, changes in ** have little impact on demand, such as necessities, scarce goods, unique goods, etc.
Products have a long life cycle and don't need to be adjusted as often**, such as furniture, appliances, books, etc.
The formula for cost-plus pricing is as follows:
Selling price = cost (1 + markup).
The markup rate is the percentage between the cost and the selling price, that is, the profit margin. For example, if the cost of a product is 100 yuan and the markup rate is 20%, then the selling price is 120 yuan.
Example of cost-plus pricing:
The cost of a clothing store includes raw materials, labor, rent, water and electricity, etc., assuming that the cost of each piece of clothing is 200 yuan, and the store owner wants to ensure that the profit margin of each piece of clothing is 25%, then he can use the cost-plus pricing method to set the selling price at 250 yuan, that is, 200 yuan multiplied by (1+25%).
The cost of a restaurant includes ingredients, chefs, waiters, utensils, etc., assuming that the cost of each dish is 50 yuan, and the restaurant owner wants to ensure that the profit margin of each dish is 20%, then he can use the cost-plus pricing method to set the selling price at 60 yuan, that is, 50 yuan multiplied by (1+20%).
Competitive pricing method is a pricing strategy that determines one's own according to the competitors in the market, and its basic idea is to compare one's own products with those of competitors, and then decide whether they are higher, equal to or lower than those of competitors according to the advantages and disadvantages of their products. The advantage of this pricing strategy is that it can avoid the first war with competitors, maintain the stability of the market, and can increase or lower the first according to the characteristics of its own products, so as to increase the attractiveness of the product. The downside of this pricing strategy is that it ignores its own costs and profits, which can lead to the product being too high or too low, losing profits, or losing competitiveness.
The competitive pricing method applies to the following situations:
The degree of product differentiation is low, there are many competitors, or the information of competitors is very transparent, such as daily necessities, FMCG, standardized products, etc.
The elasticity of demand for products is high, that is, changes in ** have a great impact on demand, such as luxury goods, fashion goods, leisure products, etc.
Products have short life cycles and need to be adjusted frequently**, such as digital products, popular products, seasonal products, etc.
The formula for the competitive pricing method is as follows:
Selling price = competitor's ** 1 + or adjustment factor).
Among them, the adjustment coefficient refers to the percentage adjustment made according to the advantages and disadvantages of one's own products, relative to the competitors' **, which can be positive or negative. For example, if the competitor's ** of a product is 100 yuan, and the adjustment factor is 10%, then if your product is better than the competitor's product, you can set the selling price at 110 yuan, that is, 100 yuan multiplied by (1+10%); If your own product is inferior to your competitor's product, you can set the selling price at 90 yuan, which is 100 yuan multiplied by (1-10%).
Examples of competitive pricing methods:
The cost of a mobile phone manufacturer is 2000 yuan, and the competitor's ** in the market is 3000 yuan, and the mobile phone manufacturer believes that its products are superior to competitors' products in terms of performance, design and brand, so he can use the competitive pricing method to set the price at 3300 yuan, that is, 3000 yuan multiplied by (1 + 10%).
The cost of a coffee shop is 10 yuan, and the ** of a competitor in the market is 15 yuan, and the coffee shop thinks that its products are inferior to those of its competitors in terms of taste, service and environment, then he can use the competitive pricing method and set the price at 13$5, i.e. $15 multiplied by (1-10%).
The demand pricing method is a pricing strategy that determines its own ** according to the demand in the market, and its basic idea is to match its own ** with the demand in the market, and then adjust its own ** according to the changes in demand to achieve maximum sales and profits. The advantage of this pricing strategy is that it can make full use of market opportunities, adapt to changes in the market, and can adopt different products according to different customer groups to achieve differentiation. The downside of this pricing strategy is that it requires accurate and analytical analysis of market demand, and it needs to be adjusted frequently, adding complexity and cost to management.
The demand pricing method is applicable in the following situations:
The product has a high degree of differentiation, there is no direct competitor, or the competitor's information is not transparent, such as patented products, customized products, luxury goods, etc.
The elasticity of demand for products is high, that is, changes in ** have a great impact on demand, such as luxury goods, fashion goods, leisure products, etc.
Products have short life cycles and need to be adjusted frequently**, such as digital products, popular products, seasonal products, etc.
The formula for the demand pricing method is as follows:
Selling price = demand function.
Among them, the demand function refers to the mathematical expression that describes the relationship between ** and the required quantity, which is usually a negatively correlated function, that is, the higher the **, the lower the demand, and vice versa. For example, if the demand function for a product is:
Demand = 1000 50 **
Then when ** is 10 yuan, the demand is 500, and when ** is 20 yuan, the demand is 0.
Example of the demand pricing method:
The cost of a movie theater is 10 yuan, and the demand function in the market is.
Demand = 1000 50 **
If the cinema wants to maximize its profits, then he can use the demand pricing method and set the selling price at 10 yuan, even if the demand is 500 yuan, the profit is 5000 yuan, that is, 500 times (10-10).
The cost of a hotel is 100 yuan, and the demand function in the market is.
Demand = 500 10 **
If the hotel wants to maximize its profits, then he can use the demand pricing method and set the selling price at 20 yuan, even if the demand is 300 yuan, the profit is 6000 yuan, that is, 300 times (20-100).
Value pricing method is a kind of pricing strategy that determines one's own according to the customer's perception of the value of the product, and its basic idea is to match one's own ** with the customer's value evaluation of the product, and then according to the customer's value perception, increase or decrease one's own ** to increase customer satisfaction and loyalty. The advantage of this pricing strategy is that it can improve the sense of value of the product, increase customer recognition and trust, and can be differentiated according to different customer groups. The disadvantage of this pricing strategy is that it requires accurate understanding and analysis of the customer's value perception, and it requires effective communication and education with the customer, which increases the difficulty and cost of marketing.
The value pricing method is applicable in the following situations:
The product has a high degree of differentiation and has a lot of added value, or can create a unique value proposition, such as innovative products, high-end products, service products, etc.
The elasticity of demand for products is low, that is, changes in ** have little impact on demand, such as necessities, scarce goods, unique goods, etc.
Products have a long life cycle and don't need to be adjusted as often**, such as furniture, appliances, books, etc.
The formula for the value pricing method is as follows:
Selling price = customer's value assessment.
Among them, customer value evaluation refers to the customer's perception of the value of the product, which is usually a subjective judgment that can be obtained through market research, questionnaires, user feedback, etc. For example, if the customer valuation of a product is 500 yuan, then the selling price can be set at 500 yuan.
Examples of value pricing methods:
The cost of a gym is 100 yuan, and the competitor's ** in the market is 200 yuan, and the gym believes that its products are superior to competitors' products in terms of equipment, coaches and atmosphere, and can help customers improve their health and happiness, then he can use the value pricing method to set the price at 300 yuan, that is, the value assessment of customers.
The cost of a training institution is 500 yuan, and the competitor's ** in the market is 1000 yuan, and the training institution believes that its products are superior to competitors' products in terms of courses, teachers and effects, and can help customers improve their careers and learning, then he can use the value pricing method to set the price at 1500 yuan, that is, the value assessment of customers.
Psychological pricing method is a kind of pricing strategy that uses the psychological factors of customers to determine their own **, and its basic idea is to match their own ** with the psychological expectations of customers, and then according to the psychological effect of customers, increase or decrease their own ** to influence customers' purchase decisions. The advantage of this pricing strategy is that it can increase the attractiveness of the product, stimulate the customer's desire to buy, and can adopt different products according to different customer groups to achieve differentiation. The disadvantage of this pricing strategy is that it requires an accurate understanding and analysis of the customer's psychological behavior, and it requires effective communication and education with the customer, which increases the difficulty and cost of marketing.
Psychological pricing is suitable for the following situations:
The degree of product differentiation is low, there are many competitors, or the information of competitors is very transparent, such as daily necessities, FMCG, standardized products, etc.
The elasticity of demand for products is high, that is, changes in ** have a great impact on demand, such as luxury goods, fashion goods, leisure products, etc.
Products have short life cycles and need to be adjusted frequently**, such as digital products, popular products, seasonal products, etc.
The formula for the psychological pricing method is as follows:
Selling price = psychological**.
Among them, psychology refers to the customer's psychological expectation of the product, which is usually affected by the customer's psychological effect, such as odd effect, anchoring effect, ** effect, etc. For example, if the psychology of a product is 99 yuan, then the price can be set at 9$9.
Examples of psychological pricing methods:
The cost of a supermarket is 5 yuan, and the competitor's ** in the market is 6 yuan, and the supermarket wants to take advantage of the odd effect, that is, the customer tends to think that the odd number ** is cheaper than the even number**, then he can use the psychological pricing method to set the price at 59 yuan, that is, psychological **.
The cost of a beauty salon is 100 yuan, and the competitor's ** in the market is 200 yuan, and the beauty salon wants to use the anchoring effect, that is, the customer tends to take the first ** seen as a reference, then he can use the psychological pricing method to set the price at 199 yuan, that is, psychological**.
The cost of a travel agency is 1000 yuan, and the competitor's ** in the market is 1500 yuan, and the travel agency wants to take advantage of the ** effect, that is, the customer tends to think that ** sales ** is more cost-effective than the ** sold separately, then he can use the psychological pricing method to set the price at 1999 yuan, that is, psychological **, and the product is carried out with other products or services, such as air tickets, hotels, tickets, etc.
This article introduces five common commodity pricing strategies, namely cost-plus pricing, competitive pricing, demand pricing, value pricing, and psychological pricing, analyzes their concepts, advantages, disadvantages, and application scenarios, and gives some examples and diagrams to help you understand and apply these pricing strategies. This article also introduces and recommends a column on smart marketing that teaches you how to use big data and artificial intelligence technology to optimize your product pricing and other marketing activities.
The purpose of this article is to enable you to choose and combine the right pricing strategy for different products and markets to build your e-commerce products. It is important to note that these pricing strategies are not mutually exclusive, but can complement and combine with each other, for example, you can determine a basic ** based on cost and competition, and then dynamically adjust it according to demand and value, and then fine-tune it according to psychology. You can also use different pricing strategies for different customer segments, for example, you can use value pricing for high-end customers, competitive pricing for mid-end customers, and cost-plus pricing for low-end customers. In short, you need to be flexible and diverse in your use of these pricing strategies to adapt to changes in different products and markets.
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