Ecommerce Growth

eCommerce Pricing Strategy: How These 9 Brands Are Nailing It

The smartest eCommerce brands lean heavily on pricing to do long-term wonders––read on to find eCommerce pricing strategies you can draw inspiration from!

eCommerce Pricing Strategy: How These 9 Brands Are Nailing It

Under normal circumstances, over 60% of shoppers claim that price becomes the leading factor that helps them decide on a purchase.

Under duress, this section becomes almost 80% of all shoppers. 

So, it’s really anybody’s guess how critical eCommerce pricing is in deciding a brand’s success—on this note, we'll be covering 9 eCommerce brands that have prioritized price optimization.

In this piece, we’ll also go deeper into how to pick a pricing strategy & how to arrive at a price mix:

How to select the right pricing strategy

How to combine pricing strategies in eCommerce to boost sales

9 Ways To Price Your Products To Drive More Sales

1. Chubbies (Psychological Pricing)

One amongst the most tapped eCommerce pricing strategies is psychological pricing. 

The reason it is both popular and effective is because it leverages subconscious biases and patterns of online shoppers to make the latter buy more. 

Why it works: While there are many different ways businesses apply psychological pricing in eCommerce, there’s a common theme of fractional ending to prices that give the illusion of being lesser than competitor prices. 

Where to use: 

✔ Tiered discounts: Ones that say buy 1 get 20% off, buy 2 get 30% off…

✔ Quantity-based pricing: Where the more a shopper buys, the lesser the price becomes per unit

✔ Product recommendations for up to three items: In other words, decoy pricing—where your attempt is to steer the shopper’s attention towards a “target” product, and to be able to do this, you present a highly expensive option alongside as well as a much cheaper alternative. 

✔ Price comparison through anchoring: Where you mention the original price, use a strikethrough and state the current price too—this helps shoppers notice the great bargain they’re getting!

Caveat: it’s a good idea to use this strategy sparingly—for example, even if you’re doing tiered discounts, see if you can limit it to a particular segment alone (like loyalty members.)

How Chubbies uses psychological pricing:

Men’s vintage shorts brand Chubbies plays with this eCommerce pricing strategy rather successfully. 

By no means are they a cheap shorts brand, but what they use to their advantage is quantity-based pricing, nudging shoppers to buy 2 so that they can enjoy a $10 off:

Chubbies uses psychological pricing for eCommerce conversions

What makes this eCommerce pricing strategy work for Chubbies is the latter’s business mission, which finds clear mention on their store, across high intent pages:

Chubbies' pricing strategy finds support from their cause-based mission

2. Thrive Market (Competitive Pricing)

When you’re exploring types of pricing strategies to apply to your business, competitive pricing may just call out to you. 

In this method, businesses price their products based on what competitor brands are charging their shoppers. 

Why it works: As a pricing strategy, competitive pricing is usually preferred because it offers incomparable transparency—at a time, when shoppers can easily go out and compare similar brands / products, a competitive pricing strategy can earn extra customer trust. 

Where to use: 

✔ In comparison charts: This creates transparency while helping you differentiate your products in other ways like material sourcing, ingredients etc. 

✔ In “price match” guarantees: Across product pages in the first fold, in linked microcopy. 

Caveat: If you’re a smaller brand that’s yet to be perceived at par with bigger brands, it’s best to stay away from this strategy—in this case, you will likely sell less than the giants and this could affect your profit margins adversely. 

How Thrive Market uses competitive pricing:

In a world where organic foods cost at least 7.5% more than their usual counterparts, Thrive Market is operating on a competitive pricing strategy. 

Whether a shopper chooses to pay the list price or opts for Autoship, Thrive Market’s “price guarantee” becomes operational. The brand even maintains a separate page to explain this eCommerce pricing strategy:

Thrive Market explains their competitive pricing model in a separate website page

3. Best Buy (Discount Pricing)

When it comes to pricing experiments in eCommerce, brands often fall back on good ol’ discount pricing. 

This eCommerce pricing strategy is a promotional means to improve both traffic and sales. 

Why it works: Typically, discount pricing aids the efforts of shoppers in finding a great price for a product they’ve been wanting to buy—this added to other strategies like 

Where to use: 

✔ Seasonal offers: When most eCommerce brands amp up their holiday marketing efforts, your discount pricing model can become the anchor for both traffic volumes & better sales. 

✔ Inventory clearance: Sluggish inventory when made part of an exclusive sale or limited time offer, can make the most of this eCommerce pricing strategy. 

✔ Subscription orders: This is a win-win scenario for you and your shoppers—because through subscriptions you’re able to improve lifetime value, while they reap some great prices. 

Caveat: Unless you’re a retailer, you might have to rethink your discount pricing strategy—you don’t want it to be too frequent or across the board so that you attract only deal hunters. For a smaller brand, discount pricing is best applied along with other pricing strategies like bundle pricing. 

How Best Buy uses discount pricing:

In their eCommerce pricing model, Best Buy usually offers products for at least 10% to 15% lesser than its counterparts. 

They have further amplified this long-standing strategy by initiating Best Buy Drops—limited time exclusive deals that only app users are able to leverage

Alongside, they also offer exclusive deals to shoppers who partake in their loyalty program “Plus”: 

Best Buy uses special discount pricing for loyalty members

4. Dollar Shave Club (Loss Leader Pricing)

When you’re trying to figure how to price your eCommerce products right, you may discover keeping the pricing lower than the actual cost of the product gives you a selling edge. 

This is loss leader pricing at play. 

Why it works: Loss leader pricing offers an instant impetus to shoppers to buy more, especially from higher-margin products. More repeat purchases as a result also drives eCommerce brands to consider this pricing strategy. 

Where to use: 

✔ New product launch: Since this is essentially penetration pricing, it can help you cement a product launch and draw attention away from competing products. 

✔ Complementary product recommendations: Apply this eCommerce pricing strategy if you deal with products that come with different parts, some of which need frequent changing (think toothbrushes, think razors.)

✔ Limited time product drops: Since this is a strategy that forces you to price your products lower than competitors, you can run limited time offers with this (so as not to impact margins.)

Caveat: This online store pricing strategy may not work for your business if your traffic is typically low. It can also be disadvantageous if your marketing spends are low and you have limited bandwidth to attract fresh customers. 

How Dollar Shave Club uses loss leader pricing: 

Dollar Shave Club penetrated an existing market with its pricing model, giving an established brand like Gillette a run for its money. 

To this day, the company focuses on serving the 18 to 34 year male demographic and uses an additional subscription-based model to drive repeat purchases (such a win-win!)

Alongside, Dollar Shave Club works with a free shipping threshold so that they don’t lose additional resources catering to low-value customers (while offering free shipping to first-time customers to lower overall acquisition costs):

Amongst eCommerce pricing strategies, Dollar Shave Club uses the loss leader pricing model

5. Tiffany & Co. (Premium Pricing)

While considering types of pricing strategies, you may opt for premium pricing if your goal is to set your offerings apart from competitor products. 

When you apply premium pricing, you set a higher price to your products in order to extend a sense of exclusivity and worthiness. 

Why it works: Premium pricing works especially when an eCommerce brand is able to develop a desired differentiation around its brand, creating a preferential perception in the shopper’s mind. 

Where to use: 

✔ Announcing upgrades: An upgrade to an existing product is a great use case for a premium pricing strategy to work. 

✔ Limited edition brand collabs: If you’re in the non-premium segment but decide to collaborate with a premium brand, you can price the resultant products at a premium. 

✔ A separate line of high-end products: You may choose to launch a separate category of products that uses finer materials or higher levels of innovation. 

Caveat: Without setting the right expectations or initiating marketing efforts, going premium is a huge risk—convincing shoppers that your products are indeed of higher value can then become a challenge. 

How Tiffany & Co. uses premium pricing: 

Manufacturing fine jewelry, Tiffany & Co. is known for its staggered approach to pricing over the years. 

While they fix their products at a premium, they also ensure customers get a number of value-add services at this price including: 

✔ Free virtual & in-store appointments—an easy multi-step form with quick options make this option user-friendly

✔ Special packaging—they call it the “Blue Box” packaging

✔ A great browsing experience—even when shoppers return to their store after a while, the brand offers a “Thanks for returning to Tiffany” note along with recommendations from the previous browsing experience:

Tiffany & Co. uses a previous browsing prompt when shoppers return to their site

We recommend you read: 6 Ways to Make Your Products Look Exclusive (& Real-world Examples)

6. Love Wellness (Bundle Pricing)

Bundle pricing is one the smartest pricing examples in eCommerce. 

eCommerce brands use this strategy to move excess inventory, increase AOV and even create limited edition offerings. 

Why it works: The bundle pricing model creates a sense of greater value among shoppers, since the bundle comes with more products but at a lesser cost. 

Where to use: 

✔ Complementary products: This gets rid of one extra step of recommending products that go along with the main product—in a way, the customer has to put in less effort to create the bundle.

✔ “Pure” packages: These are packages that consist of products that would’ve individually cost a lot more—but you bring them together and don’t sell them separately, while charging a lower price.

✔ “Build your own bundle”: This is a way to offer shoppers more choice while charging them less when they increase their order size.

Caveat: Bundle pricing may not be a great idea for products that you have been selling consistently at a full price—in a way, selling your bestsellers through bundle pricing may affect your margins. 

How Love Wellness uses bundle pricing: 

Love Wellness created exponential business growth by marketing their products to the right audience segments on social, especially Facebook. 

Alongside, they took a bundle pricing stance and combined it with subscription savings to offer 50% more savings as against one-time purchases (which already stand at a lower value than the list price):

Love Wellness uses bundle pricing and offers additional savings to subscribers

You may like reading: 15 Product Bundling Examples That Convert (& 9 Proven Ideas)

7. Nordstrom (Dynamic Pricing)

When picking an online store pricing strategy, some brands go with dynamic pricing, which is to price products in a way that reflects the market situation. 

Why it works: Dynamic pricing allows eCommerce brands to flex their prices based on demand—which means if there’s a higher demand, you can charge a relatively higher price. 

Where to use: 

✔ Seasonal surge: The ability to offer better products at a lower price during peak buying season can be super effective.

✔ New launches: This is ideal for brands that frequently launch new product lines—with each new launch, previous lines can be made cheaper and more financially accessible to shoppers.

Caveat: To apply this eCommerce price strategy to non-perishables is often a bad idea, unless a clear customer roadmap has been created. 

How Nordstrom uses dynamic pricing: 

While at the uppermost layer Nordstrom maintains a premium pricing strategy, they also make smart use of dynamic pricing from time to time. 

They typically leverage anniversary sales and defined clearance events to run steep discounts on their products, managing to be at par with competitors who may be charging the same but don’t have the same brand value:

Nordstrom uses dynamic pricing as a pricing tactic to sell more

8. Dossier (Fair Pricing)

No matter what pricing experiments you’ve done so far, you may want to consider fair pricing as part of your strategy going forward. 

Fair pricing helps you price your product in a way that balances its value against customer expectations in a sustainable way. 

Why it works: Fair pricing can actually be a hook for shoppers who make purchases based on their values—when these values match the values with which a product is manufactured, this pricing strategy becomes even more effective. 

Where to use: 

✔ Luxury products cutting across segments: This has a lot to do with positioning your products to an unlikely TG because the goal is to attract a new customer segment (while attracting them with a price that they can pay.)

✔ Sustainable products: When labor, sourcing and ingredients are more expensive, shoppers may feel they might have to overspend. 

Caveat: Going the fair price route may be tough if you’re not yet established as a brand, as this forces you to share your margins with customers. 

How Dossier uses fair pricing:

Perfume brand Dossier has maximized profits by taking on the fair pricing approach. 

While they started with prices across all perfumes at $29, they’ve lowered this further over time and right now, their perfumes start at $19. 

As a result, first time visitors at the Dossier store end up buying at least 2 to 3 products during a single shopping session:

Dossier fair pricing eCommerce strategy

9. Away (Value-based Pricing)

In eCommerce pricing, a value-based strategy looks at fixing prices based on what customers consider the perceived value of the product. 

Why it works: This pricing strategy works because it is able to close the gap between production value and sales profits by leveraging customer perception—when supported by marketing efforts, this can be a great profit-earning model. 

Where to use: 

✔ USP-led product offerings: Value-based pricing works especially for brands and products that are able to differentiate well from competing offerings. 

✔ Influencer-driven product drops: Limited edition products that come out of collabs can also leverage this model well because of the value-led perception they create. 

Caveat: Using value-led pricing for highly commoditized products or those that have multiple & varied counterparts is a bad idea. 

How Away uses value-based pricing:

While Away is technically a luggage brand, its founders insist on focusing on the “journey.”

This is what has helped Away stick with a value-based pricing strategy that customers have no trouble putting their faith in. 

Each product comes with multiple thoughtful details & specifications, and what’s better, the brand even allows shoppers to personalize their buys:

Away value based pricing example from eCommerce

How to select the right pricing strategy

What is the smartest price strategy? What’s going to work for your business given the industry, the category? 

Follow the steps below to see which eCommerce pricing strategy will fit your business:

1. Assess the pricing potential

One of the first things to do to increase your chances of earning a profit is to go as close to your ideal pricing potential as possible. 

To be able to do this, focus on:

What your market will reasonably pay for what you have to offer

How your value proposition is supporting your pricing goal (or not)

What existing operational / manufacturing / business advantages you have 

What you can do to innovate on your products / product mix in the coming months

2. Study TG shopping behavior

When you’re looking to create an eCommerce customized pricing strategy, your TG’s shopping & browsing behavior should play a central role. 

Here are some cues to begin that analysis:

How are they interacting on “free” offerings across your store? (for example, do more shoppers seem to prefer free shipping over free gifts over a certain threshold?)

How are they engaging with recommendations you show up on-site and over email? (is there a pattern of adding only lower priced recommendations to cart? Or are they picking higher-priced products only from certain categories?)

How are they engaging with offers and discounts over the year versus during peak shopping season?

Which products are they searching for more and what triggers them to perform a search?

3. Check on competitor pricing

Just as your target audience makes up a big piece of your pricing strategy puzzle, so do your competitors. 

In oder to assess how they’re approaching their pricing:

Check for the pricing strategies of both direct & indirect competitors

Go deeper into the context in which a particular pricing strategy was set

Figure out when singular strategies are used versus when competitors opt for a price mix

✔ How they justify factors like volume, USP, positioning, business goals etc. with respect to pricing

✔ Consider your category, brand & industry before you make conclusions

4. Figure out the price range

To enhance your eCommerce price management, it’s critical that you set the price range for the products you sell—here are a few to-dos in this aspect:

Check on multiple pricing models and see which one will help you balance revenue & value

Look into variable costs associated with each product (labor, raw materials, shipping etc. which can change based on how much you’re manufacturing)

Similarly look into fixed costs like rent, utilities, permits etc. 

Figure out your profit margin per product and see if currently it’s being met—if not, work backwards to determine how best you can optimize

Compare the range used by your competitors for products that are similar

5. Get customer feedback on pricing 

It’s a fact that 81% of shoppers prefer to compare prices before buying. 

So get your eCommerce pricing strategy right, one step is to ask customers for frank feedback:

Incentivize feedback when asking email subscribers to provide it—ask cart abandoners specifically

Insert a question on pricing effectiveness within your website feedback form

Go through reviews & get in touch with those who’ve raised issues with pricing—you’d then know the exact reasons why they didn’t find the price to be right (this is especially helpful if the price is high)

6. Experiment & iterate

While you’d want to get to the right pricing strategy immediately, it’s hardly ever possible without multiple experiments—in your pricing experiments, here’s what you’ll need to look into:

✔ Reframing how you mention your prices—for example, a product you sell may be $72 for a year, but you might benefit from stating it as $6 a month

✔ Recommending products with price differentials—A/B test what placement of recommendations seems to nudge shoppers to adding to cart and completing a purchase

✔ Using a mix of prices across your store—for example, you may wish to make your membership program prominent and charge lesser prices as part of this versus the usual list pricing

How to combine pricing strategies in eCommerce to boost sales

During your pricing AB testing efforts, you might just find that a mix of prices will work better for your store—so, to combine pricing strategies, here’s what you’ll need to do:

1. Define your goal

Before you set in motion an effective price mix, you’ll have to see what you’re aiming for: are you trying to retain customers & lessen cost of acquisition? Or are you looking to push out a higher sales volume? Or is your goal to attract new customers with the least amount of marketing spend?

2. Consider what pricing works well in your category

It’s likely that not all your competitors are following the same eCommerce pricing model. 

So, what you’ll need to round up on is what the most successful brands are doing—and see their approach during significant events such as 4th of July and Black Friday. 

Based on your goal(s), figure out how competitors are determining various components around pricing including membership programs, discounts, referral rewards etc. 

3. Consider the factors that affect your prices 

What will also help you arrive at a price mix is to take into account factors that influence your prices directly or indirectly: 

✔ Market condition—is inflation raging? How is your industry / category responding to the market situation?

✔ Shopper perception—what sort of views do they hold about your category? How do they view your brand and its offerings in particular? 

✔ Spending ability—since every TG segment comes with its own unique spending power, you’ll have to look at what yours is defined by

People also ask:

1) What is the best pricing strategy for ecommerce?

While eCommerce brands can consider picking from several different strategies, the most successful ones seem to be:

✔ Value-based pricing: This is one of the best eCommerce pricing strategies because it lets a business define prices based on the value the customer perceives the brand is about

✔ Competitive pricing: As a pricing model, this works because it allows unparalleled transparency for shoppers to consider before buying

✔ Dynamic pricing: This is one of the best pricing strategies because it takes into account the complex market conditions that eCommerce plays in 

✔ Penetration pricing: Due to heavy competition, eCommerce brands often need a pricing edge over competitors—during product launches, reducing or spiking the price to alter shopper behavior can be effective

2) What are the benefits of two-sided pricing?

Two-side pricing adopted by typical eCommerce marketplaces have multiple advantages associated with it including:

✔ Wider customer base, leading to greater transparency

✔ The ability to compare prices, features and specifications 

✔ A competitive context that usually leads to enhanced customer support & experience

3) What is the difference between price anchoring and price skimming?

In eCommerce, price anchoring is a psychological pricing tactic that helps a business recommend a higher value product against a lower value one. This enables drawing the customers’ attention to the lower-priced product and often guarantees a purchase. 

Price skimming, on the other hand, is about launching a product at a much higher price only to lower it in a staggering way so that price-sensitive customers become interested and convinced. 

Balance your pricing strategy with great UX

98% of visitors who visit an eCommerce site—drop off without buying anything—even when the pricing is just right.

Why: user experience issues that cause friction for visitors.

And this is the problem ConvertCart solves.

We've helped 500+ eCommerce stores (in the US) improve user experience—and 2X their conversions.

How we can help you:

Our conversion experts can audit your site—identify UX issues, and suggest changes to improve conversions.

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