Price Optimization – Price Drop or Opportunity?
Hundreds of new webshops are created every day, thousands of new customers are won and countless products are ordered online. Consumers are happy about the growing offer, but at the same time the competitive pressure on marketplaces for companies is constantly increasing. They are forced to keep a close eye on what is happening on the market in order to be able to generate competitive advantages over the competition at an early stage and to optimize prices.
The assertion is circulating that the constant repricing on Amazon , ebay and in regular online trading is leading to a negative price spiral and thus reducing margins. However, whether this is actually the case depends primarily on how dynamic price optimization is used strategically: When used correctly, repricing does not trigger “price dumping” – it can even prevent it. Therefore we would like to use this article to discuss the advantages and disadvantages of automatic price optimization for retailers.
The price: often the #1 decision criterion
The more frequently your customers shop online, the more experienced they become in finding the best suppliers. No wonder, since nowadays individuals have many tools at hand to check the price: Google Shopping, price search engines and other helpers conveniently display the hits found. Even if there has long been a rethinking in society away from cheap goods towards high-quality products, the product price is still the most important decision-making criterion for many. Nobody wants to pay too much for a service or an item. It is therefore important for companies to adjust their prices to changes in the market and to react to them as quickly as possible. The following applies: the stronger the competition in which you are active, the faster these can take place. Especially in the marketplace environment, it is no longer uncommon for the price of one and the same product to change several times a day.
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Computer-aided price optimization as an opportunity
Companies often have an extensive range of goods. This makes their offer more attractive, allows cross-selling, but at the same time poses a problem for retailers who have to ask themselves how to sell each of their products at competitive prices.
Of course, no one is in a position to process the flood of information about the constantly changing market conditions and to keep the price of all products as attractive as possible. On the other hand, however, this is implicitly assumed by the buyer. Computer-aided, automated price optimization can solve this problem. You can check the deals 24/7 compare and set the price within the defined price limits.
Advantages of price optimization with SnapTrade
With our innovative Price optimization software improve she your On-line -Business in connection with intelligent strategies and tools. SnapTrade offers you the following options and advantages:
- 2in1 software for Amazon and eBay
- integrated competition analysis
- personal advice and online help
- ASIN-Advisor finds new Amazon bestsellers
- Interfaces to inventory management
- Price calculation calculates price ranges
- Price optimization for Amazon B2B prices
Our tip: Register and test our 14-day trial version today, completely free of charge and without obligation. Benefit from measurable success through innovative price optimization!
Price optimization in the high price segment
Some manufacturers have managed to place their products so cleverly in the market that they get the snob effect advantage do. The customer is willing to accept a significantly higher purchase price for a certain image or status symbol. Even if the selling price is significantly higher, the margin for the reseller is low. In order to still be able to sell acceptable quantities, you have to stand out from the crowd of other providers, which is why price optimization should definitely be considered for such high-priced products.
5 reasons why automatic price optimization is worthwhile
Price optimization has a number of advantages, we present the 5 most important of them.
#1 You save time and resources
Manually customizing your products can work for a small range with just a few items. But even then, the adjustment takes a lot of time and ties up resources that you could use elsewhere. An automated solution does this work for you.
#2 You react faster to market changes
Regardless of the time involved, manual adjustment also means that you can only react to changes in the market with a delay. Depending on how quickly the market prices in your segment change, this can mean that the change is already out of date by the time you enter it. A repricing tool adjusts the product price within a very short time, if necessary several times a day. In this way, you always sell in a market-oriented manner without having to constantly keep an eye on it.
#3 You sell with optimized margins
We had already cleared up at the beginning that repricing automatically also means price dumping. Repricers like SnapTrade have demand optimization that allows you to sell products that are in particularly high demand at a higher price. This allows you to optimize your margin and increase profits.
#4 You can calculate your prices precisely
Precise pricing for online shops is essential if you want to determine your profit margin and sell economically. With our price calculation , you determine the article prices based on your specifications directly in the tool and can use the results to determine your price ranges.
#5 You optimize your sales strategy
In order to be able to carry out an intelligent and above all effective price optimization, automated systems for price optimization offer an efficient solution. Provider-specific rules also make it possible to respond specifically to the respective competition and to thin out lists of offers according to ratings and shipping time – not every competitor has to be undercut.
Conclusion
If you look at the development of the market in recent years, it can be said that retailers no longer have sole voting rights in pricing. The sales market has changed from a regional to a national to an international market as a result of online trading. The increasing supply naturally means that the competition is greater and tougher. While customers are aware of the tools necessary to compare offers, price is one of the key factors that determine whether a sale is made. Companies should therefore see price optimization as a kind of ingredient in their personal recipe for success.
