eCommerce Pricing Strategies: 20 Smart Examples To Help You Sell More

The whole of eCommerce stands on the concept of pricing. 

This is what inspires businesses to do their homework and strategy and fix pricing points that’ll balance customer satisfaction and bottom line gains. 

On the other hand, 90% of shoppers spend time hunting for the best online deals before settling on one. 

At Convertcart, in our work through CRO to drive greater returns for 500+ businesses over the world, we’ve continually come against pricing challenges. 

And this is why, in this post, we’ll cover examples from brands that apply strategic pricing principles—and also elaborate why they work in that instance and what other instances they can be used in. 

Here we go. 

1. Bundle Pricing: Enhances the perceived value

Several items clubbed together and sold at a reduced price—in comparison to their individual prices—can seem worth the cost. 

The hook that makes this strategy work is: more value for lesser money to pay. 

That’s exactly what the Nintendo experiment—which Vineet Kumar from Harvard Business School executed—proves. 

When customers were given the option to choose from either individual and bundle video game units, the sales went up to 100,000 units. 

However, when the option was taken away and customers were forced to choose only from the bundle units, the sales declined by 20%.

Here are some great examples:

BEARDBRAND

Why it works:

- Clear mention of original price (adding up the prices of each of the products) and slashed bundle price 

- The fact that a shopper can go with a fragrance preference for the whole bundle

- The brand promise that products/fragrances can always be swapped if one doesn’t work out

- The bundle containing products that comprise a whole routine—from styling paste to utility wash

3 WISE MEN

Why it works:

- Two different kinds of pricing offers promoted side by side—the cheaper one has more products but promises lesser savings while the more expensive one promises lesser number of products & more savings

- Across the offers, the brand has created a complementary theme—the ability choose from shirts, knitwear, trousers, denim, shoes and boots to spruce up the wardrobe––making it possible for the same shopper to be interested in both offers

- Not too many products on feature—too many can cause analysis paralysis

Tactics to apply Bundle Pricing:

Ensure the bundle price is at least 10% lower than the original price

Consider taking it up to 30% less if it’s financially feasible because this typically makes customers take note of the price difference.

Bring a discount into the picture when shoppers choose to buy more of one product

This can increase the efficacy of the price you’ve chosen for the bundle, resulting in the Average Order Value going up. 

Follow the rule of 100 to set the price

It suggests that when the price of the product is below $100, offer a % discount, but that when it is $100 or above, go with a $ discount to impact the perceived sense of value for the shopper.

Segment customers and find out what their hierarchy of needs are

This way you can bundle the products more precisely (irrelevant products in a well-priced bundle WILL NOT sell). 

Bundling on your mind? Read: 15 product bundling examples that convert (& 12 proven ideas) 

2. Price Discrimination: Personalization in pricing that guarantees action

A price discrimination model involves charging the customer the maximum amount they can pay. In real-life scenarios, the pricing is decided based on customer segmentation. 

This is dependent on several factors such as demographics, location, perceived value, etc. 

The types of price discrimination that exist are:

First-degree Price Discrimination

Also called personalized pricing, where every shopper ends up paying a different price for the same product. 

If you have to successfully use this as a brand, you’ll have to segment your target market very carefully, so that a segment you plan to capture gives you enough returns. 

Here’s a classic example:

eBAY

Why it works:

- The brand decides the minimum price the seller can sell at—this sets the price expectations of shoppers as well

- The best price offer a shopper makes gets to take the product home—this is invariably higher than the price set by the brand in the first place

- The brand introduces a time urgency “6d 11h” for both sellers and buyers to act 

Second-degree Price Discrimination

This type of price discrimination model is determined by quantity. 

The price differs as per the quantity sold. 

For example, larger quantities are sold at lower unit prices or with absolute discounts.

This can be effective for businesses that are trying to attract several subsets of customers from a larger set—for example, Alibaba.com applies this strategy to draw in customers that consist of small to large companies that buy in bulk. 

A B2C brand like iHerb, on the other hand, ensures larger discounts on larger buys for individual buyers. 

ALIBABA

Why it works:

- The pricing slabs cater to four different segments of customers—from those who will place a visibly smaller bulk order (anywhere from 1 to 499) to those who will place a massive order (above 10,000)

- An additional coupon giveaway for a LIMITED TIME that can make the original price go down by $80

iHERB

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Why it works:

- Two quantity options on offer—giving shoppers more choice alongside a discounted price

- The UX automatically lays focus on the option that features a higher quantity—what makes it convincing is that the savings is clearly mentioned––the shopper saves 65% on the 360 count version and 40% on the 90 count one

Third-degree Price Discrimination

In this kind of price discrimination, customers are pulled into segments first. 

This then decides how much they can reasonably pay. 

Sometimes, brands draw segmentations between loyalty members and non-loyalty members to demarcate prices differently (as we’ll see in the second example here)

SPOTIFY

Why it works:

- Entices the student segment by offering a deep discounted pricing—whereas individuals pay Rs. 119/ month and families pay Rs. 179, students only pay Rs. 59

- The one month free trial highlights the price differentiation even more—essentially if a student signs up, they’ll be able to enjoy the service for Rs. 29/month for the first two

SAM’S CLUB

Why it works:

- The $20 Instant Savings is an instant attraction—but shoppers soon know they have to register in order to access it—this also enables the brand to add to their existing email list of customers

Tactics to apply Price Discrimination:

Explore the two-part tariff method

Especially if you sell products that come in parts–think of razors (which come as razor handles and razor blades)–where you can first charge for the main part of the product (razor handle) and then have them buy the detachable parts (the blades). 

This can be more economical for the shopper than buying multiple single-use products of the same kind. 

Bring in a range of coupons that you can display

It can target those who fall into specific segments (for example, frontliners), are buying larger quantities, are buying wholesale etc..

This way the kinds of audiences you reach through this kind of pricing strategy increase. 

3. Loss-leader Pricing: Draws shoppers to increase their Average Order Value

A loss-leader pricing strategy is ideal for those eCommerce stores aiming to grab a considerable market share or new customers to their store. 

The prices here are fixed much lower than the cost margin. 

Almost all eCommerce store owners have played around with loss-leader pricing at one point or the other. 

It’s an often-used tactic to lure customers away from the competitors and purchase from your brand. 

This can have a dual impact on new customers:

- Make them buy more at one go

- Make them unconsciously anticipate future deals & discounts (which in turn can make them engage with the brand more)

Here’s an example:

GLASSES USA‍

Why it works:

- Deep discount just for signing up—his is an example where the reciprocity principle is leveraged really well

- Clear mention of social proof—1709 people signed up today—instantly works as a point of conviction for potential customers

- The limited time nudge—with the clock ticking away at the top, forces shoppers to focus on the decision of signing up

Another frequent example is that of Black Friday or Cyber Monday deals that feature jaw dropping prices. 

Tactics to apply Loss-leader Pricing:

Choose peak season/ specific well-known calendar days

Since this pricing strategy is not feasible all year around, pick the holiday season or specific calendar days (like Veteran’s Day) to pull in more shoppers. 

Apply a deep price slash to a new product launch

To make selling more successful in this instance, pick rewarding segments from amongst customers: those who’ve bought from you before and those who’re searching for similar products across competitor brands. 

For more product launch inspiration, read: 25 product launch email examples that drove massive sales (+ templates)

4. Price Skimming: Aims at making high short-term profit possible

Established brands like Apple often use price skimming to launch new products, and it typically has two stages:

- In the 1st stage, the price they apply is ridiculously high and works to justify either an “exclusive” or”limited edition” nature of the product

- In the 2nd stage, the brand brings down the price to match it with the market normal—once the initial craze has died down

Price skimming is essentially a psychologically-driven pricing tactic that ensures a shopper’s mind registers a first high price perception. 

This enables the brand to live up to a “great value at not-such-a-high price” image when they do decide to bring down the prices. 

Here’s another great example:

NIKE

Why it works:

When Nike first launched the Air Max 270, they pegged its price at $180, which was much higher than what the brand’s competitor products. 

At this peak, many would have bought the product simply because FOMO was driving them. 

However, the brand eventually brought it down to $150. 

By the time this happened, the hype around the product (and its perceived high value) had increased enough for more shoppers to take notice and opt for the Air Max 270 over other similar sneakers. 

Tactics to apply Price Skimming:

Assess the uniqueness of your product

Price skimming would be considered a scam if you were to apply it to everyday products. 

But let’s say your product is something as unique as a bicycle seat ergonomically designed for people with arthritis, you can launch it at a much higher price and then eventually apply other strategies to bring the price down to increase demand. 

Study your target audience

It’s a double advantage if you have a valuable product and an audience that’s willing to pay. 

So, study the audience you’re catering to:

Are they high spenders?

If yes, what kind of products do they spend on and why?

5. Premium Pricing: Puts the brand image at the forefront

When eCommerce brands entice shoppers with a consistently high price as compared to what competitors pin it at, it’s considered a case of premium pricing. 

It’s quite similar to the price skimming strategy—the only difference is that in premium pricing, the price doesn’t lower after a period of time but remains the same.

Part of the success of a premium pricing strategy always relies on how successfully the brand is able to live up to the promise of luxury/ quality/ uniqueness it has been making. 

Here are a couple of examples: 

‍ROBERT GRAHAM

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Why it works:

- A “friends and family sale” discount applies on this product—so though it’s expensively priced (as compared to an H&M dress, which would be available at $35), it becomes more attractive to shoppers

- “You have great taste” is a social proof label that immediately puts the shopper in the league of the select 244 people who’ve viewed this product before—it’s a section of people who can probably afford more expensive products

COACH

Why it works:

- The BNPL option present makes the $495 look manageable to more discerning shoppers—even those who can’t afford a single payment can still buy this bag. 

Tactics to apply Premium Pricing:

Drive the UVP of your products through marketing efforts

This is because potential shoppers need to believe your product is worth the price you’re charging—tell them what will change for them if they use the product, what benefits it covers that no other product does, how long-lasting the effects are etc. 

Drive authority by having experts back your brand

If you think you’ve created a truly cutting edge product, reach out to some experts in the field and have them try it out—their word for it will go a long way in helping you enhance audience perceptions. 

You’ll love reading: eCommerce marketing strategy: 12 questions founders should ask themselves

6. Psychological Pricing: Makes shoppers feel good about their buying decisions

The method of tweaking a pricing strategy based on how the human mind works, considers and makes decisions, is what is often called psychological pricing. 

Here are a few examples:

WAYFAIR

Why it works:

- The “left digit effect” reflects a bias humans have towards numbers ending with a 9—so if the price is $9.99, then shoppers perceive it as way lower than when they read $10.00

The University of Chicago and MIT conducted studies in which they discovered that customers gravitate towards prices that end with the numerical number 9.

The physiology behind this is that human beings normally start reading from left to right. 

Therefore, if the price is indicated as $399, we interpret it as being closer to $300 than $400 since we look at the first number from the left, which is 3. 

NORDSTROM

Why it works:

- A sense of urgency is what the “Limited Time Sale” creates—this further pushes shoppers to take notice of the discounts being offered and act based on what they’re pulled to buy

HUEL

Why it works:

- Comparison pricing that draws attention to flexibility & a lower price—this convinces the shopper to subscribe at no added risk (“cancel anytime”, “edit anytime”) while saving 10% on every order

MEJURI

Why it works:

- FOMO and exclusivity is a combination that bewitches almost any kind of shopper—the offer is just for a day and there is a lucky draw involved, which will reward ONLY two people (for $250 each)

Tactics to apply Psychological Pricing:

Introduce social proof

Be it how 5 star reviews a product has received or how many people are currently viewing it, social proof is a psychological nudge that creates a sense of safety and conviction even amongst the most aware shoppers. 

Make use of stacked discounts

Let’s say you’re already running a 20% sitewide sale and a shopper arrives at your storefront—this also becomes a possibility for you to get them to sign up for your newsletter with an “additional 10% off when you sign up” message. 

Segment customers effectively based on if they’re new, returning or high-worth to determine what kind of discounts you should offer and at what point of their exploration. 

Recommend products using the centrestage effect

Make your product recommendations also hold a perceptive impact as far as pricing goes with the centrestage effect. 

Basically, what this means is that if you’re showcasing three products, it’s a human tendency to observe the one that’s in the middle the most. 

So it makes sense to drive value in the recommendation you place in the middle. 

In the following example, notice how Swanson Vitamins introduces a 2-pack product in the middle with a price that’s neither the lowest (on the right) nor the highest (on the left).

7. Value-based Pricing: Focuses purely on the value & worth of a product

Value-based pricing refers to a situation in which businesses set prices for their product based on the perceived value. 

So, this means that the focus is on the customer’s perception of a product’s worth and not the time or cost incurred in producing the product.

Here are a few examples:

EVERLANE

Why it works:

- Everlane consistently applies a higher price on their “new arrivals” compared to other sections on their site—because this kind of pricing applies to “new” products, customers feel more comfortable paying

KLIMOM

Why it works:

- Klimom, an Indian homegrown milk brand, charges a much higher value on per liter of milk (Rs. 200 a liter versus the market price of Rs. 30 a liter)—but backs it up with tenacious quality management

Tactics to apply Value-Based Pricing:

Factor in customer needs to create product updates/ launch new product with high price

Survey your current email list with a short questionnaire asking them about their current experience with your products and what other categories or features they would like to see. 

If there’s a pattern in the answers that come out, you’ll know what changes to make to your current product line and what kind of price increase your target audience will tolerate. 

Use social commerce to sell directly to shoppers

In this case, marketing and selling through third party sites that habitually reduce prices may have a terrible impact on your bottom line. 

Social commerce, on the other hand, can come in handy because you can feature ads from time to time and also establish direct contact with interested buyers. 

Here’s a valuable read:16 Elements all High-Performing Product Pages have in common (Updated for 2023)

8. Penetration Pricing: Helps attract shoppers to buy new products

When you enter a product market at below-average prices to capture a major portion of the market or grab an early customer base, it is referred to as penetration pricing. 

Here’s a scenario where penetration pricing works. 

Suppose in a handmade soap market, there’s already a store that sells soap units at $15. 

Now a global brand with a higher production capacity enters the market. 

They start selling the soap units at $6.05—the cost to produce the soap being $6. 

The profits are negligible but it cements the brand in the long term as the cheapest option available. 

Here are some examples:

H&M

Why it works:

- H&M has taken a penetrative pricing stance in whichever market they've entered—in the example above, an H&M dress costs even less than dresses that some India-based boutique brands create

IKEA

Why it works:

- Ikea, the Swedish brand, offers lower prices across categories and products (an example would be an Ikea armchair is available at Rs. 3990, while an equivalent from FabIndia could cost Rs. 22, 000)—this sort of penetration pricing immediately makes Ikea more desirable in the eyes of the average shopper looking for a good deal

Tactics to apply Penetration Pricing:

State your price advantage clearly

If the market price of products similar to yours is $15, and yours stands at $9, then it has to become obvious. 

On your product page, clearly bring this out by stating the market price and then label your price as “our special price” for shoppers to make note. 

Apply it to products that have high demand

This means if out of the 10 categories and 30 products you run your business with, the 6 that are bestsellers are best promoted further through penetration pricing. 

If you can especially tweak your marketing and social media plans to promote these more, chances are you’ll have more eyes viewing them (and even buying them). 

Is your site experience matching up to your pricing strategy?

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Why: user experience issues that cause friction for visitors.

And this is the problem Convertcart solves.

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