The Best Pricing Trends in E-commerce for Revenue Growth This Year

By Thomas Bennett Financial expert at Priceva
Published on November 13, 2022
Calculating the right price for your products is challenging. You need to consider production expenses, your customers’ price references, and your desired profit margin. On top of that, you want to ensure that your prices are competitive – this is why it is important to follow a certain pricing strategy.

There are many pricing models to use, but no matter what you choose, don’t disregard general market trends. This article dwells upon pricing trends 2022-2023 that will help you understand your competitors’ pricing approaches and what is happening on the e-commerce market.

Modern Pricing Trends to Consider

There is much we can discuss in the context of customer behavior, but this guide is dedicated to pricing trends. Hence, we will observe the latest approaches to price formation used by both e-commerce giants like Amazon and local web stores. Each approach works better for certain types of businesses and niches – some of them may be useful for your pricing strategy too.

1. Machine Learning Pricing

Also called algorithmic pricing and predictive pricing, machine learning implies using artificial intelligence to analyze market trends and historical data. As a result, you receive data-based price predictions and suggestions. Algorithms take into account:

  • Product purchase history;
  • Current market demand;
  • Competitors’ prices;
  • Supply and demand curve.

You might have heard about one type of machine learning pricing called sales forecasting. In this case, AI processes your business’ sales history. It analyzes the number of sales at certain price points in order to predict future sales and, accordingly, your revenue. That can help you figure out the best price point at certain moments.

This pricing strategy is gaining traction among e-commerce businesses because it uses big data instead of human assumptions. As an alternative to machine learning, you can implement price optimization software by Priceva: it analyzes different price scenarios and makes suggestions based on elasticity of demand, product life cycle and other variables.

2. Value-Based Pricing

This pricing model implies charging as much as your customers are willing to pay. Instead of pricing based on what you think the product is worth, you analyze its value for customers and charge accordingly.

This pricing strategy is based on thorough analysis of your target audience and their buying personas. It is important to understand their pain points and the issues that can be resolved with your product or service. This information can be obtained via surveys and direct conversations with existing customers.

By delivering what your buyers need and excluding what they don’t, you come up with an ideal product and optimal price/quality ratio. That makes it possible to grow customer loyalty and increase retention rates.

3. Transparent Pricing

With the massive spread of online stores, customers no longer need to waste time on visiting brick-and-mortar stores to analyze prices – they can simply check online. Consumers with a smartphone can visit several stores in a row, compare competitors’ offers, and make quick purchase decisions.

For this reason, transparent pricing is based on providing customers with full pricing information that enables them to make a carefully weighed decision. This strategy implies that buyers should be able to easily see prices and understand what they’re paying for.

Consumers who prefer your brand over your competitors should not be surprised by hidden fees or expensive delivery rates. With transparent pricing, they know in advance what’s included in their receipts, so they don’t hesitate about completing a purchase.

4. Psychological Pricing

This pricing strategy serves to alter customers’ spending behavior or shopping habits, as well as motivate them to make certain purchasing decisions. The psychological approach has been used by retailers for decades and still works well.
There are several methods that can be used in e-commerce:

  • Decoy pricing. This tactic implies offering three price levels, from which customers will be motivated to choose a certain one. As a rule, consumers select a medium-priced item because psychologically they tend to avoid extremes. Sometimes, decoy pricing is used to promote the most expensive item by making it a much better deal than slightly cheaper options.
  • Charm pricing and odd-even pricing. When retailers write $3.99 on a price tag, consumers read $3 instead of $4. Studies prove that buyers are more likely to purchase items with prices that end in an odd number rather than an even number.
  • Innumeracy. You can offer a 50% discount for people buying two items, or introduce a “Buy one get one free” offer. Mathematically, these options are the same, but the second one is perceived by buyers as a better deal.
  • Artificial time constraints. “Only a few hours left” and “One day only!” messages are widely practiced in the e-commerce market. They create a sense of urgency and encourage users to purchase quickly so they can enjoy a discount and get the product before the seller runs out of stock.

5. Dynamic Pricing

One of the major pricing trends, the dynamic model is based on the current demand and market conditions. Many e-commerce businesses leverage this approach by using dynamic pricing software. It is driven by algorithms that calculate the best current price points. Machines analyze such factors as market demand, customer behavior, competitor prices, and other relevant information.

Since online markets and consumer behavior are ever-changing, dynamic pricing models imply regular pricing adjustments. For example, during a rainy week, consumers tend to buy umbrellas and raincoats more often, so sellers can charge more for these items. When the weather gets better and demand for these items subsides, prices eventually go down.

Hence, dynamic pricing gives sellers great opportunities to make revenue, but it’s important to catch the right moment. This is why you should consider automatic price tracking and market analysis if you want this strategy to be fruitful.

By the way, the dynamic pricing approach is represented by different strategies, including:

  • Competitive pricing;
  • Seasonal pricing;
  • Demand and supply pricing.

Finally, before you decide to try dynamic pricing, remember: no one can predict whether a lower or higher price will bring the intended results. It is very important to perform some testing in your online store to see how consumers react to price changes.

6. Personalized Pricing

The idea behind this pricing strategy is that the retailer adjusts pricing according to buyer personas. At first, you may not know who your average customer is, but as you manage to collect more personal data (demographics, buying patterns, average check, etc.), you can personalize the shopping experience and capitalize on it.

Online retailers use historical data to analyze customer behavior and offer each buyer different discounts and bundles with the help of their dynamic pricing software.

For example, say a shopper buys kids shoes for her children every 3-4 months. When sellers have this data at their fingertips, they can offer her personal discounts when she is looking for a bargain.

Personalized pricing comes with two advantages:

  • Although personal targeting is more expensive, it is more efficient than offering mass discounts.
  • It establishes customer loyalty and prolongs LTV.

7. Hyperlocalized Pricing

Analysis of big data can also help you personalize pricing at certain locations. Marketers divide their market segments into so-called “hyperlocalized price zones.” When is this applicable? First, hyperlocalization is a must if you operate internationally. Second, it can be efficient even within a single country where customer segments have a significant difference in income.

Say you sell shoes of different brands in several neighborhoods. While Jimmy Choo high heels symbolize prestige and style, Aldo shoes are chosen by customers seeking the best price/quality ratio. Hence, it would make no sense to promote Jimmy Choo in neighborhoods with low discretionary incomes, while promoting Aldo in those locations can help you boost sales.

Final Thoughts

Since pricing is the major factor that drives purchasing decisions, it is very important to provide customers with good deals and reasonable discounts. Powered by a knowledge of market trends, you can make proper adjustments and personalize offers for your customers.

For your pricing strategies to be relevant and efficient, use dynamic pricing software. It will gather big market data and help you charge the most optimal sums that both satisfy your customers and meet your profit goals.


How do you identify trends?

Look for a relevant market trend by analyzing your successful competitors and their campaigns. Analyze purchasing situations and don’t forget to read up-to-date industry research and trend reports.

How do you analyze price trends?

In order to analyze pricing trends, first, you should collect market data: how customers behave, what price points they refer to, how changes in demand affect product pricing, and so on. This process can be automated with advanced price optimization software at your fingertips – Priceva offers a whole lineup of services that can help you track and analyze prices online.

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