Your pricing strategy guide

Crafting the right pricing strategy is crucial for keeping your business healthy and thriving. As you can probably imagine, price is often a big deciding factor for customers when they’re thinking about whether to buy something. Not only that, the prices of your products also directly influence how consumers perceive them. If your prices are either too high or too low, in both cases it can really shake up your sales and influence your brand perception.

Margins on Spreadshop

At Spreadshop we take care of production, shipping, and customer service for you, meaning you only have to think about your marketing and design creations. You also have control over your margins for each product, meaning you control the retail price of each product and how much you make on each sale. When you add a new product to your shop a margin will be automatically set up for you depending on which product it is, and you can easily change this in your settings. Simply go to Edit shop → Prices & discounts → Prices in shop to adjust your margins according to the base price of the product.

Pricing strategies

Your pricing strategy is going to influence many aspects of your business, such as revenue, demand, and target market. Carefully considering pricing strategies helps ensure that your business not only attracts and retains customers but also operates profitably and sustainably in its market environment. Here are some pricing strategies for you to consider for your products:

Market-oriented pricing

Market-oriented pricing involves setting prices based primarily on the current market conditions and competitor pricing strategies rather than solely on the cost of production or consumer demand. This strategy can be particularly effective in highly competitive markets, where small differences in price can be a significant deciding factor for your potential customers.

The way in which you price your products based on the market average will also influence your brand perception. There are three ways you can generally approach it with this strategy. By setting a price higher than the market average you can establish your products as more premium, and by having high quality designs and products as well as a professional store design, your products can have a more deluxe feel to them. Pricing your products the same as market average is a safe place to be. This means you’ll have a wide potential audience which is the same as your competitors. Setting your prices below market average is one method to win over the price-conscious customers in the market. However, with this approach you need to be careful that you’re still covering all the costs for the product and prints.

Dynamic pricing

With the dynamic pricing strategy, the price of your products depends on what’s happening in the market at any given point in time. This means that when demand for a specific style or design is higher, the products price then goes up. When demand is low, the price goes down. For example, a product like a jacket or hoodie would be more in demand in winter than in summer, which means you would set the price higher when it starts to get cold and lower it in during the warmer months. With this strategy you have to keep a constant eye on the trends and needs of the market, as well as seasonal changes, and subsequently change your prices frequently.

Anchor and discount pricing

Now we’re getting into some sneaky strategies. With anchor pricing you set up an imaginary “original” price in your shop and immediately set the new price of the product at a lower price. This way you are urging your customers to buy at this “new” special offer price that makes them feel as though they’ve found a good bargain. Discount pricing is similar but has a slightly different approach. With discount pricing you set the original price as higher than market price but have regular sales on your products, which is enticing to bargain hunters. With this method you will most likely get most of your sales during popular sales seasons such as Black Friday and Cyber Monday, before certain celebrations, or during the changing of the seasons. Learn more about setting and adjusting promo periods in your shop at the YouTube Tutorial or Blogpost.

Penetration pricing

Penetration pricing, as the name suggests, is all about penetrating the market. It refers to pricing your products at below market average in order to attract a reasonably large customer group and then once you have a solid loyal customer base, gradually increasing your prices for more profit. This method is good for beginners, however as mentioned previously, it’s still important to make sure you are making a profit with each sale. You may have recognized this method used by Netflix, which was founded in 1997 and is now one of the market leaders of streaming services.

Choosing the best pricing strategy for you

The best and most suitable pricing strategy for your shop is going to be dependent on your assortment, designs, target audience, and so many other elements that make your shop unique. It’s important that you do market research and research your competitors as well. It’s always a safe bet not to price your products too high or too low to start off, and to always include discounts and promotions into your revenue calculations. Find the sweet spot for your shop and figure out what works best for your goals.