oraya - Market Intelligence & Price Management Blog

Important considerations for product launch with regard to pricing

Written by oraya Official | Jun 21, 2023 4:45:00 AM

Have you ever wondered how online stores and marketplaces set prices for their products or services? Why do some prices seem too high while others are too low? E-commerce pricing is a process of setting prices for products that are offered through sales channels on the Internet and play a crucial role in the success of a business. It is not just a matter of setting a price that covers the cost of the product. Rather, it requires a detailed analysis of various factors, such as market conditions, customer behavior and competition.

The ultimate goal of e-commerce pricing is to find the sweet spot that maximizes profits while being attractive to customers. In this article, we delve into the intricacies of e-commerce pricing and discuss the factors companies must consider to set the optimal price.

How do retailers and manufacturers determine the optimal price for launching a new product? 

Several factors come into play when launching a product in terms of pricing that should be considered during this process. 

First, it is necessary to know to which target group the product will be directed. The price should be set in such a way that it becomes an affordable product for the target group. At the same time, the expectations of the product quality must be met.

Furthermore, competition is an important factor that plays a role in the formation of the price of a product. A rare or unique product can be offered on the market at a higher price than mass-produced goods, although the price here must remain competitive. 

In addition, the manufacturing costs of a product play a major role in determining the price. These must be covered, of course. The price must be set somewhat higher than the manufacturing costs in order to enable a profit.

Dynamics of pricing in e-commerce

Important components of pricing are price optimization and price elasticity. Dynamics of pricing in e-commerce means the change of prices for products or services offered online. The market is always subject to movement and change. 

The reason for this is, among other things, that prices here can be adjusted relatively quickly to respond to changes regarding various factors, such as demand or the competitive environment. In addition, the dynamics of pricing in e-commerce are influenced by factors such as the competitive situation, the price sensitivity of customers, the availability of data or the efficiency of logistics.

Pricing based on costs and competition

Looking at pricing methods, those based on cost and competition are two of the most common practices in e-commerce.

In cost-based pricing, the calculation of a product's price refers to the costs incurred in manufacturing, for marketing or for distribution.It is a sound method of setting prices, ensuring that all costs incurred are covered and a profit for the company is included in the process.

Market / competition based pricing takes into account prices set by competitors of similar products or services. This ensures that prices remain competitive.

Relevant parameters for the pricing of one's own products through automated price monitoring

Differentiated pricing can prove to be an advantage for companies in order to increase sales or achieve competitive advantages. Automated price monitoring is one way to implement a differentiated pricing strategy. By observing the prices of competitors and market changes, companies can usually derive interesting parameters for their pricing. Automated price monitoring enables a quick reaction to changes. It thus increases the competitiveness as well as the profitability of the company.

When it comes to pricing your products effectively and in a targeted manner, you can benefit from the innovative solutions of copio analytics for retailers and oraya insights for manufacturers. Both technologies provide you with an advanced data analytics platform to better understand market demand, customer buying behavior and the competitive landscape. Increase your sales and improve your competitiveness by making decisions based on data.