It’s an open secret that your product pricing determines your overall profitability and how your brand is perceived in the marketplace.
A high price tag is risky as it can alienate most of your potential customers. On the flip side, a low price tag can eat into your revenue and end up affecting the whole business’s performance.
So, how can you make sure that you get it right?
Enter price testing!
Price testing is when you launch a test to determine the best price for both your business and your prospects.
I get it. Testing your product price sounds like a risky and scary process, but when done correctly, it pays dividends.
In this post, we are going to talk about price testing in great detail – we will discuss about the right time to adjust your price, factors to consider, and how to do it on your Shopify store.
When should you adjust your prices?
There is never a wrong or right time to adjust your prices. Here are some common reasons that can drive people to raise prices:
When the production costs are high
When the production costs of your brand increase, you are more likely to raise the price as a way of offsetting the changes in costs. Suppose the demand for your product increases, production cost is more likely to increase as you will buy more raw materials you need to meet consumer demand. This is to say that an influx of orders can increase production costs which, therefore, results in a change of price.
When there’s inflation
There’s no escape to this one! Inflation is something that impacts everyone. For example, a sudden increase in fuel prices can affect every sector of the economy – and when this happens, businesses raise their prices so that they remain profitable.
To keep up with the competitive landscape
The competitive landscape you are in influences the way you price your products. Suppose your direct competitors raise their prices, you are more likely going to do something about your price – whether increase or decrease – so that you remain competitive. Always keep an eye on your competitors’ pricing strategy so that your business doesn’t lose that competitive edge in the market.