Choosing the right product price?
Pricing your products correctly on bol.com is not easy. What should be the price for your product? When is it too much? When is it too little? This blog gives you crucial information on how to choose the right product price.
Highlights blog
- Choose the right pricing strategy;
- Look at the competition and the life cycle of your product
- Never forget the number 9 and remember price anchors
Three strategies for the right product price
The right price for your product depends on the strategy you follow. Your strategy in turn depends on the type of product you sell and what kind of competition you face.
1. Using a high price strategy
Potential customers usually have a good idea of what a high price is for a product and what a low price is. If you choose the high price strategy, your product should be perceived that way. To successfully sell your product then, it is important to focus on value perception.
To make it clearer, you can do the following exercise: think of some luxury brands and some cheap brands. Of both, write down how they present themselves. What is the difference between the luxury brands and the cheaper brands? You will soon see that there is a range of differences to be found.
Below are the things that increase the perception of value of your product so that you can charge a high price:
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Packaging and design
Every higher-end product has unique packaging. Your product has to "look" expensive
. By making your product look expensive, it also immediately appears to be worth more.
The form of offering
Differentiate! Make sure you offer your product just a little differently than your
competition does. A very simple solution is, for example, an extra addition to the
use of your product. Think for example of a nice (and handy) bag to carry
outdoor articles. Your potential customer will always compare your product with
a competing item on bol.com.
Be unique
Expensive products should be the only ones of their kind. When you have no competitive ability
in a crowded market, you also cannot charge more than the market average.
2. Use a low price strategy
Remember: when your product is not unique, you are always going to compete on price. So when
there are no obvious differences in what you offer, or your competitor,
potential customers are going to look at price. So that can also work to your advantage.
Opting for a low price is the strategy of choice in a competitive market. People
just love to be cheap. Therefore, this is the best strategy to follow
when your product has many similar items on bol.com.
Still, it doesn't have to be that you really are the cheapest. Testing a higher price
than the average of your competition is good to try out. When you test a higher
price and your conversion rate stays the same, you immediately have more margin and thus profit. The
price elasticity theory states: when the price goes up, the number of sales goes down.
The question is always: how much does your price affect your conversion rate?
If it's a small amount, you might be better off putting a higher price on your product
. To arrive at an ideal price for your product, however, it is important that you test this well
. My advice is not to go for products under 20 euros. The
reason for this is quite simple: you take away shipping costs for the customer. When you sell a
product on bol.com for €14.95, the customer pays almost 30% extra just to get the
home. The Dutch are not so keen on paying shipping costs.
3. Use a niche pricing strategy
When you market a new product on bol.com, your frame of reference is not
present or very small. You might think: "my potential customer has no idea what I'm delivering,
so they don't want to pay for it."
That's not true.
The truth is that you can always sell your product, as long as there is demand for it. Even if
they don't know you yet.
Should you be dealing with a niche product, you can come to a good price with the
following steps:
- Write down the price of some similar products, or products aimed at the same
audience. - Out of these, pick the three best products. These are the products you think belong to
your competition. - Next, ask yourself these three questions:
Do I have competition already offering my item? If it is b2c, and you may assume that now
, charge 20-50% more for your product than the one at the top of your written down list
.
Does your product offer an advantage in a different way than your competition? Then
choose a middle ground between your competition's highest and lowest price.
Are you selling your niche product in a different form? Then choose a price between the
average price and the low price.
Again, the rule goes, keep testing. On bol.com, different target groups meet at
, yet the average persona is that of a two earner with a reasonable
wallet. Often sellers on bol.com think their product will go well
all at once and offer it for €20.95, assuming they have 10 sales every day.
Keep in mind that the number of sales can be disappointing. Then it's helpful to have just a little
more room in your price. Sellevate has a handy tool to calculate product research.
Choosing the right pricing strategy
Now that you know which three strategies to choose from, it's important to know how to go
analyze your competition. If your competition is selling the telescopic shower rack
for €34.95, you should consider doing the same. When you know that it sells well at
this price, you can assume that it has also been tested at a higher and lower
price. €34.95 is where the money is then.
To be successful, it's up to you to find the ideal price for your product on bol.com. That
ideal price is closely related to the product's life cycle. That means that some
products are simply much more desirable at one time than at a
another. In this separate time where we're dealing with Covid-19, there's a big
increase in online purchases and in the spring, for example, you also know that on average people are
going to do more home modifications. So be aware of this as well and move with
those changes.
Once you've envisioned what price range your product falls into, how your competition is positioning itself
and what the approximate life cycle of your product is, it's time to select a price
Keep the following points in mind.
- Rather a higher price than a lower price. A higher price increases the idea that your
product is of good quality. When you build from a low price to a high price
, you will face more resistance from your potential customers to
compared to when the product is slightly overpriced. - Don't try to win on price alone. There are countless sellers on bol.com that
have built a good name for themselves or larger brands that sell through bol.com
. When you are smaller and unknown, it is important to deliver just a little extra
(so even with a low price strategy). Large lots have deeper pockets and
always buy cheaper. - Price anchors are important. Never count 40.00. Count 39.95! If you want to charge more than 40.00
euro, don't go to 41.00 but go to the natural new
price anchor: 49.95.
An advanced pricing strategy
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The baiting principle
The bait principle is a way to present your product in such a way that your potential customer at
bol.com moves to the product you would like to sell. Dan Ariely (author of
Predictably Irrational) explains this pricing strategy there. When people were offered a trip
to Paris (option A) and a trip to Rome (option B), they found had hard time choosing.
Both cities are beautiful to visit.
Then they were given three options to choose from:
- The trip to Paris with free breakfast
- The trip to Paris without breakfast
- The trip to Rome with free breakfast
Most chose option A. The trip to Paris with free breakfast. The idea here
behind this is that choosing between the two options of Paris, is easier than choosing between Paris
and Rome. So what about a pricing strategy?
One example was an advertisement from an economics magazine that offered subscriptions
. They had three options:
- The regular newspaper for $59 a month;
- Read the newspaper online for $125 a month;
- Both newspaper and online reading for $125.
Overwhelmingly, option three is the best deal
- 16 people chose option 1;
- 0 people chose option 2;
- 84 people chose option 3.
But what if option two was taken away and people could only choose between option 1 and option 3
without the price changing?
You would say the results would be the same in proportion. Yet that was not the
case.
- 68 people chose option 1;
- 32 people chose option 3.
Only the comparison of option 3 versus option 2, made option 3 seem so good.
So you might choose to offer multiple bundles on bol.com to test your best
set. For example, consider a baby bathtub for €29.95, a non-slip mat for €34.95 and
a combo of these for €49.95.
Conclusion
Take a good look at how you can go about presenting your product and what pricing strategy best suits your
product. As a seller on bol.com, you have many options to determine whether to go into the low,
the high, or the niche pricing strategy. Include your competition in this and
consider the life cycle of your product. Keep testing your ideal price and never forget the
magic number "9.
