Determining Readiness for eCommerce: Evaluating Your Pricing Management Strategy
by Kris Harrington
A manufacturer’s pricing management strategy is a critical focus of any eCommerce readiness assessment. The more robust a pricing structure, the more successful a manufacturer’s aftermarket sales strategy will be. However, determining whether or not a pricing management strategy is actively driving conversions can prove a difficult task. For an organization to determine the efficacy of their pricing management strategy, there are several criteria which must be evaluated. These criteria have been carefully selected and should be evaluated as part of an eCommerce project plan.
Maintaining pricing and price lists for products at both the customer and the item level within the manufacturers ERP will ensure that uniformity is established across all sales channels. Evaluating price lists based on customer buying behavior and modifying pricing strategies to be in line with competitor pricing should be considered good practice for eCommerce sellers. Customer discounts can be applied to retail/list price, and should be available across channels. Utilizing a consistent methodology for determining pricing structures should be considered a priority.
Communication is Key
Item and customer pricing should typically be published on a scheduled basis that is dependent upon the manufacturers product line and demand. In a business to business environment, notifying buyers of price changes is good practice and should be done to ensure the buyer is aware of any changes they may encounter. This can be accomplished through mailing lists, newsletters, and announcements within the manufacturers eCommerce store after a user has successfully logged in. Actively maintaining a line of communication with account buyers is a great way to establish trust and transparency.
The Customer Comes First
The customer is the single most important aspect of a manufacturer’s pricing management strategy. Understanding the nature of the customer, as well as their likes and dislikes is a step in the right direction. This will allow for an organization to determine what difficulties buyers are having with current offerings, and allow them to adapt their pricing strategy to address the buyers needs. Remember, a pricing structure will strongly influence how buyers perceive the value of your products, and organization. Many organizations award account buyers with pricing discounts for their loyalty to the brand. Offering customers the ability to see their specific pricing in an eCommerce site is an important element in ensuring a great customer experience.
Know Your Competition
Conducting a market analysis will aid the manufacturer in maintaining a competitive list price for all products and familiarize them with pricing across the industry . This should be performed frequently to allow for any pricing updates which will reflect current market demand. It is always important to maintain a competitive pricing structure, but eCommerce will require especially close attention. The modern buyer will conduct their own research before making a purchasing decision and it’s important that a manufacturer is maintaining realistic and competitive pricing. There are many other variables that will play into a buyer’s purchasing decision, but all things being equal, price can have a positive or negative impact on the sale.
Don’t Sell Yourself Short
For any organization evaluating eCommerce readiness, analyzing current pricing methodologies is critical to success. It’s important to establish and communicate a clear and consistent pricing structure across all selling channels. This will let the buyer know exactly what to expect―something which significantly improves eCommerce adoption.