Testing price points
In the past I have always been slow to play with pricing too much because I don’t want to ruin the customer experience with prices fluctuating up and down. In the past I have always been reluctant to drop below certain margins in order to protect the bottom line.
I learned an important lesson this week about price points, however. It is OK in some cases to take half the margin on a product that you previously did if the volume goes up three or four times. Conceptually I always understood this and of course you have to keep in mind that fulfillment costs go up, but in the end you really can be better off and increase your purchasing power (a fringe benefit I never considered).
If you’re an internet retailer, test price points!
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