Never before has price optimization been so complicated and challenging for the retail industry. Following the development of the online marketplace, pricing directors have to come up with sustainable strategies faster than ever before, as well as adapt to ever-changing customer behaviors. Driving growth and increasing profit has become an uncertainty for many and this calls for extensive research on price optimization. Where should you start and how can you spend your resources in a smart and educated way? The answer lies in pinpointing your biggest challenges and finding efficient solutions in a short time frame, which nowadays can be done with the help of specialized software.
Keeping up with large competitors such as Amazon
Increased competition from large online stores such as Amazon and eBay is one of the biggest threats for local retailers. On the one hand, they have to compete with their low prices and product variety. On the other hand, they have to compete with their resources. There are many players on the market today and if you want to keep up, you need to analyze their performance. Although it sounds impossible, you can compete with large companies, as long as a you understand what they are doing well. This doesn’t mean that you should create your price optimization by their rules; on the contrary, it means that you have to pick up key information from relevant competitors and use them to generate your own, bespoke strategy.
Low prices or large profit?
Another big dilemma that pricing directors face today is the seemingly impossible co-existence between low prices and large profits. From one point of view, it seems that low prices are the ones attracting customers and increasing their loyalty, but, looking at things from a different perspective, this doesn’t always guarantee a steady profit. The key is finding a balance between the two. There’s no need to waste nights and spend long office hours, because price optimization software can give you clear solutions in a shorter time frame.
Determining which products are price sensitive
Price sensitivity is a very delicate matter. You can and should change product prices, but you shouldn’t do that randomly. Instead, you should always change prices for those products which are more likely to affect customer behavior. There are several ways to determine these products, but, again, you have to do this in the quickest time possible, otherwise you are missing out on opportunities. The best solution comes from modern price optimization software, which gives you clear insight into your products.
Meeting promotional expectations
Last, but not least, it’s essential not to disappoint customers in the pursuit of profit. After all, a business can only grow if it has loyal clientele, so when choosing your pricing strategy, you have to keep in mind how it will influence customer perception. No matter if you are a small or large retailer, local or global, this aspect should not be neglected. Make sure you consolidate your pricing strategy using key intelligence from pricing optimization experts and take advance of the benefits of specialized software.