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Top 6 Repricing Strategies for Sellers You Need to Know

By Priceva
on August 23, 2022
To maintain competitiveness in any market, you need to keep pricing optimal enough to both satisfy consumers and fulfill your financial goals. This is why it is essential to develop a repricing strategy that will help you maintain and even improve sales volume and profit margin.

But how exactly to reprice goods? Are there any rules?

Yes, and they can be followed with the right repricing strategy at your disposal. This guide explains the components of an effective strategy and what can help you streamline price adjustments without any extra effort.

The Limits of Your Repricing Strategy

Repricing strategies are among the major tools for companies to reach their financial goals and generate a steady profit. Typically, repricing strategies rely on the rules of dynamic pricing to automatically set the most competitive prices: they make it possible to define an optimal price point based on market fluctuations.

Before you come up with some repricing strategies, you need to be aware of certain limits, namely:

  • Price restrictions. For any product in a competitive market, there are upper and lower psychological price limits for consumers. Exceeding these thresholds can affect both your company and other market players. Harsh underpricing can ignite price wars and significantly decrease the income of all retailers involved. Also, inappropriate pricing can discourage potential customers from purchasing your products.
  • Lower profit margin. When crafting a repricing strategy, you need to consider both customers’ expectations and your financial goals. Sometimes they are hard to align: consumers cannot afford to pay the regular price, but reducing the cost of products will sabotage your efforts to boost or maintain a certain profit margin.

All that means you need to figure out a perfect repricing strategy that will fit your business and allow you to reach your goals. Below, we will discuss the major steps on the path to developing a perfect repricing approach.

Pro Tips on Setting a Repricing Strategy

In order to elaborate an efficient repricing strategy for your business, you need to take into consideration a few critical points. Here are essential stages on the way to defining your perfect repricing tactics:

  1. Define your competitors. First of all, you need to do in-depth research of your competitors: their prices serve as benchmarks for defining a competitive cost for your products. Why is it so important? Some e-commerce businesses form prices without due consideration of the market landscape. They ignore competitors on marketplaces and comparison websites, not to mention numerous small webstores. As a result, customers are lost to competitors that possess market knowledge and figure out optimal price points.
  2. Analyze price fluctuations on the market. Observe the moments when products become unusually expensive or cheap, and what circumstances lead to price spikes - massive sales events, discounts, high season, etc. That will help you define the perfect timing for seasonal sales and stock your warehouses in advance before large sales events.
  3. Divide your products into categories depending on how their pricing reacts to market changes and consumer behavior. That will facilitate price adjustments down the road.
  4. Lastly, establish a set of rules according to which you will execute your repricing strategy. You can implement these rules in your repricing software, and the quotes will be updated automatically when the selected criteria are met.

Examples of Repricing Strategy Implementation

If you operate in a market with a high product turnover and large sales volume, you need to monitor competitors’ prices several times a day to adjust your rates. With Priceva, you can automate the process and let our bots collect pricing information. More than that - you can set different criteria and rules for separate items or categories. The time of repricing depends on the number of products and websites analyzed, but repricing several times a day is achievable.

Updating Product Price 5 Times a Day

If you operate in a market with a high product turnover and large sales volume, you need to monitor competitors’ prices several times a day to adjust your rates. With Priceva, you can automate the process and let our bots collect pricing information. More than that - you can set different criteria and rules for separate items or categories. The time of repricing depends on the number of products and websites analyzed, but repricing several times a day is achievable.

Drop & Raise

If you focus on several key products and want to reprice them often, Priceva allows you to enjoy enough flexibility and maximum efficiency. We can set up certain timing for automatic repricing or notifications with price suggestions. Coupled with pricing intelligence, repricing software provides recommendations based on ever-changing market conditions (product prices, competitors’ stock, etc). Hence, you can adjust your pricing accordingly and drop or raise prices at the right moments.

2nd Cheapest Store

Not every store aims to be the cheapest option on the market – all in all, it can hurt profit margin and brand reputation. Are you willing to earn enough operating a discount or low-price brand? Then you can opt for being the 2nd cheapest store: set up Priceva price tracker to monitor the rates of the biggest dealers on the market (1-4 competitors, for example) and enable automatic price updates in your webstore.

Competitors of Different Importance

With Priceva, you can divide your competitors into several groups, for example, important and less important ones. Different price updates will be suggested after analysis of different groups. When key competitors’ products are absent, you can increase prices, or lower them to MAP if competitors’ products are in stock. The number of competitor groups is not limited, and you are free to develop your own repricing rules in our software.
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Pro Tips for Repricing Your Products Correctly

Repricing is an essential business practice for retailers because it allows them to maintain and increase profit margin and stay competitive. Before experimenting with your repricing strategy, you should mind the optimal price limits for your products. Here is what the price is based on:

  1. Production costs. This includes raw materials, manufacturing, research and development, transportation, and storage. The sum of expenses per product comprises the minimum basis to which a surplus should be added.
  2. Fulfillment and storage fees. When a retailer buys products from the factory to sell online, warehouse expenses add up. Shipping and fulfillment can also make the item more expensive.
  3. Promotion. Sale events like Black Friday are one more expense item. You will need to set prices so as to attract an audience without losing profit entirely. Don’t forget to include advertising costs in your total cost calculations.
  4. Brand positioning. If you are selling top-quality or luxury products, you can allow yourself to set prices higher. However, the value of your brand and goods should be delivered coherently, so be prepared to spend more on marketing.
Lastly, when you know what your products’ price thresholds are, it’s time to figure out optimal repricing points with consideration of supply and demand. When you introduce a new product to the market and it gains traction quickly, you can charge more. But when other sellers develop and present their substitutes, you will have to adjust the pricing.

Use Repricing Software

If you have numerous products in your webstore, consider automating the process of price adjustment. Repricing software can do this task for you: it analyzes the market and updates your prices based on different factors, such as supply and demand, competitors’ pricing strategies, and so on. For example, when other stores lower their prices, the software will correct your quotes to ensure your competitiveness on the market.

The repricing software by Priceva is driven by formulas that can be based on different market conditions. Users can create their own formulas that trigger automatic cost updates depending on market changes, absence/stock of items, number of competitors below/above a certain selling price, etc. As a result, you enjoy a flawless repricing process with stable income and can focus on business growth.

Final Thoughts

Repricing strategies help retailers and businesses change the prices of their products more efficiently. It is important to exercise careful planning when you want to charge more or less for your items — price fluctuations cause changes in consumer behavior. By developing a suitable repricing strategy and using repricing software, you can improve sales volume, increase profits and outperform your competitors.

FAQ

What is Meant by Repricing?

Repricing is a change in a product’s price which is done for certain reasons. For example, a retailer can lower prices when demand for the product falls, or increase prices at the peak of the selling season.

Why is Repricing Important?

Repricing allows sellers to maintain their competitiveness in the market by keeping the cost of goods affordable and agreeable for customers. Repricing strategies are based on metrics that help retailers better understand the market, consumer behavior and competitors’ tactics.

How Long is Repricing?

When analysis and price adjustments are performed manually, it can take several days or even weeks, which means you can be late catching up to market trends. With repricing software, this task is fully automated: algorithms analyze product pricing on different marketplaces and competitors’ websites, and the software instantly updates prices in your webstore according to pre-set rules.

How Do you Reprice a Product?

We have already discussed the fact that you need to use a repricing strategy tailored to your business requirements. When you change pricing, you should also have lower and upper limits that should not be exceeded if you want to preserve a normal sales flow and profits.

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