Setting Retail Prices in PrestaShop: Tips to Follow

It goes without saying, but one of the daunting tasks in retail is setting the price and setting it right.

Unfortunately, majority of the retailers and merchants consider price setting as irrelevant or an afterthought. Several number of times, entrepreneurs are seen copying their competitors, fixing random prices or even the worst which is; guessing. If you one amongst these, STOP!

Keep in mind the fact that owning or creating a successful PrestaShop store isn’t all, maintaining it while keeping all aspects in line is far more important – pricing being one of them. 

Yes, pricing isn’t easy when you’re in the retail scenario – you set the price low and you lose out on profits – you set the price high and you lose out on customers. But like every complex thing comes with a simple solution, so does pricing.

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As a retailer, you must carry out a market survey before setting your price. Apart from this, you need to consider:

• Cost of Production
• Business Costs
• Revenue Goals
• Competitor’s Pricing
• Customer Behaviour

Further, don’t miss out on how your price affects your customers psychologically. You may not know it, but psychological is vital in setting a price. 

It’s time to get started with steps that PrestaShop store owners and every other eCommerce business owner can adopt to get the prices right and simplify the pricing policy.

Start with Discovering the Most-Adopted and Effective Pricing Strategies

Once you are aware of the successful pricing models in your industry, setting a price will become an easy job. Moreover, there would be no room for guesses and more room for confidence since you are adopting the trail and tested ones. Some of the most common ones are:

Keystone Pricing
Keystone pricing is the most common way of pricing products in retail. As a retailer, you simply double the product cost as their price i.e. doubling the wholesale price.

This strategy ensures ample profits and turns out to be effective to a great extent. However, sometimes it is hard to pull-off when your products are easily available in the market. In such cases, if your inventory turnover is slow, handling and shipping costs are notable and your products have something unique, then keystone pricing is a great bet.

Multiple Pricing
Product bundling pricing or multiple prices is another method of setting retail prices. Commonly seen in grocery stores and even in an apparel store, here the retailer sells more than one product at one single price.

For example: You can sell a combo of trousers and a belt and make more profit than selling the products individually.

Dynamic Pricing
As the name suggests, this practice involves using flexible prices for your product according to the present market demands. You may change your price as many times you want based on your customer’s purchasing habits. The strategy’s main aim is to maximize profit.

Second: Adopting Price Elasticity For Higher Market Share

There is a common conception that low prices generate higher sales and revenue. However, there is a probability that you may win or lose. Lowering the costs of your products strategically is beneficial and may even result in more revenue. How? Through minimized consumer surplus i.e. the difference between what the customer was willing to pay and what he/she pays.

This strategy calls for awareness about the sales volume of your product at a particular price rate in order to maximize profit. Further, you should also know the factors that lead to profit, which is ‘price elasticity.’ This term is used to measure the relationship between the change in the quantity of a specific product and the price change. If the change is huge, the price is ‘elastic.’

Third: Stick to a Strategy That Reaps Long-Term Profits

In order to make way for long-term profits, it’s crucial to know the current business metrics. After all, your pricing strategy should generate enough profit to meet up your overhead costs such as tax, permits, licenses, employee’s salaries, rent and others of the same kind. Make sure these overhead expenses are calculated monthly so that you can base your product price setting and get a precise idea of how your business is moving.

Fourth: Stay on Your Toes

Prices can seldom be fixed for long. But your costs, customers and competitors are the ones that keep changing. Thus, you will have to shift your prices to keep up with the market. It is recommended to keep an eye on what’s going on and maintain regular communication with your customers to make sure your prices remain optimal.

Bottom Line
To stay at the top of the changing market needs and demands, it’s essential to adopt a pricing strategy that is both profitable and dynamic. Further, be updated with your store’s metrics to ensure minimum or no losses and maximum satisfied customers.