WHY SHOULDN’T BUSINESS OWN A LOW PRICING STRATEGY?

pricing strategy

Pricing strategies are a predicting factor for businesses whether or not the customer will buy the product. Pricing influences both sellers and buyers. The combination of favorable market trends, analytical data of both customers and businesses, product quality, and optimal pricing strategy generate sales resulting in the success of the brands. 

Pricing considerations of being low or too high have a major impact on sales. Although reducing the pricing of the product is a common strategy to amplify sales which is, of course, a short-term strategy if it contains no pitfalls. Price lowering strategies can be harmful and impact brands’ value thereby lowering profitability.

For an error-free and automated business process, quotation management software sets optimal pricing strategies for guaranteed profits. 

Cons of lower pricing in an e-commerce

1.Credibility

Undoubtedly, the availability of businesses online helps them to reach a global level. Contrarily, it has pitfalls drawing the profits of the businesses. The prices being compared in an e-commerce business is a drawback for them. It increases the competition for businesses operating from different geographical locations. Automatically, it loses the credibility of your business among the customers despite having lower pricing but no shipping facility in cross-border areas.  

2.Rebates

Promotion and rebate offer to increase the retention rate of the customers. Lower pricing strategies can’t let businesses push occasional discount offers as it will decrease their profit margins. While the competitors with premium pricing of the products capably lure in customers with hefty discounts. 

Seasonal discount offers are a portrayal of the businesses that offer discounted prices in the market. If businesses fail to implement this as a strategy, they are not considered for selling lower pricing of their products. 

3.The perceived value of the quality 

Although the lower cost of the products brings in more customers; the strategy is more likely to rely on the competitive pricing and production cost of the businesses. It creates an overall perception of offering cheap products in terms of pricing as well as quality. Ultimately, the businesses with premium pricing can generate more sales even if you are selling the same quality of the products. 

4.Customer service

If businesses accept minimal or negligible profits at the early stages of the businesses, it might shear away the quality of multiple processes of the businesses. E-commerce businesses encounter huge hits on customer services. Failure of satisfactory customer services increases the churn rate of the customers. Pricing considerations of being low or too high have a major impact on sales. Although reducing the pricing of the product is a common strategy to amplify sales which is, of course, a short-term strategy if it contains no pitfalls. Price lowering strategies can be harmful and impact brands’ value thereby lowering profitability.

 Philosophy Behind Low Pricing Strategy 

A low pricing strategy is optimized to trigger the demand for the products in the market. Market penetration is one of the most implemented price-lowering strategic models. he prices being compared in an e-commerce business is a drawback for them. It increases the competition for businesses operating from different geographical locations. Automatically, it loses the credibility of your business among the customers despite having lower pricing but no shipping facility in cross-border areas.  

Companies emphasize making shares out of the market. Businesses employ lower pricing strategies generally in two cases:

  • When the product is not getting significant sales.
  • When businesses can achieve economic sales. 

Conclusion

When businesses strive to grow faster in the competitive marketplace, the smart strategies push them to accelerate sales and leverage the power of advanced quotation system software. A leading SaaS service provider platform, Vistaar empowers businesses with strategies to expand their business and profitability. 

 

 

 

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