Pricing products is an important thing when you sell products in your online store. No matter what type of products you sell, pricing products is a deciding factor to your revenue and profits. In this article, I will let you know the pricing strategies and pricing methods.


Definition of pricing

Price is defined as the amount required as payment for your products, pricing is a process to set the price for your own products. Pricing not only determines the price paid by a customer, but also links revenue, profits and customers in your online business.

To pricing a product, you need to consider much. It is easy to get stuck on your pricing strategies when you launch a new product. If your prices are too high, you’ll lose sales. If they’re too low, you won’t make enough profit.


What are pricing strategies?

Pricing strategies are models or methods used to set the best price for a product. It can help you to set your price for your products and maximum profits and revenue. 

Pricing strategies account for many business factors, for example revenue goals, marketplace objectives, target buyers, and product types. Also, they are influenced by external factors, for example, consumer demand, competitor pricing, and overall market trends. 

Here are some common pricing strategies:

1. Value-based pricing

With the value-based pricing, you can set your price according to the worth and perceived value of your products. It is used when the perceived value of products is high. This strategy tends to involve products that are completely unique.

For example, if you sell jewelry in your online store, the customers are willing to purchase with a higher price. Because the higher price means the best quality and premium materials. 

Value-based pricing is a strategy which enables business owners to maximize profits by focusing on how much they can make from their products rather than its cost. But you need to take much time to check if your customers are willing to pay more than you currently charge.


2. Competitor-based pricing

Competitor-based pricing means that you can set your price by comparing product price in relation to competitors’ price for the same or similar products. It  is a good strategy when you just start up your online business.

When you know how your competitors are pricing their products, you can have a foundation upon which you can set prices for your products. Using this pricing strategy, you can provide a better price than your competitors. 

Competitor-based pricing is an easy way to find the best product price for beginners. What they need to do is find competitors and check their prices. But it limits your ability to connect the value of your products with the price it demands, and it may be difficult to set up your pricing issues in the future.


3. Cost-plus pricing

Cost-plus pricing is one of the simplest pricing strategies, it is purely based on the cost of your products. Most sellers are using this strategy, you can add a markup to the cost to determine the final selling price.

When you calculate your price with this cost-plus pricing strategy, there are only two things you need to consider: Your cost and your desired profit. You can just use this formula: Price = Cost + Profits. For example, your cost from supplier is $10, and you want to get $5 profits, then your final selling price is $15.

Cost-plus pricing strategy is easy to calculate your selling price and you can get predictable profits. However, this strategy can’t respond to consumer demand trends and it limits the profits growth.


4. Price Skimming

This strategy means that you set the highest price when the product is entering the market initially and then lower it over time. It is designed for new or novel products in the market.

With this strategy, you can recover the investment and get considerable profits before the similar products enter the market, even if the high price limits the purchase of some people. To use this strategy, you need to be a technology leader in the market and take the chance in time, or you will lose the competitiveness in the market.


5. Loss-leader pricing

Loss-leader pricing focuses on selling products at a loss to appeal buyers to purchase a more expensive product in your online shop. The loss cost can be recovered by the profits of other expensive products. 

This pricing strategy can help you to increase the average order value, the buyers will want to purchase the complementary products in addition to the cheap products.

With loss-leader pricing strategy, it can help you attract more customers with low price products and increase customer lifetime value. But please note that you may lose if your customers are not willing to make additional purchases.



The 5 pricing strategies are most used for online sellers, you can select one or more strategies to calculate your own selling price. As your business expands, you may need to use different strategies for different types of pricing products.