Automated pricing automatically adjusts prices based on rules you set. You define the thresholds and parameters, such as staying competitive or protecting profit margins. If a competitor changes their price and it falls within your rules, your price updates automatically. This approach saves time, ensures consistent pricing decisions, and helps you stay competitive without constant manual adjustments.
A/B testing in pricing is a way to compare two different price points to see which one works better. By showing one price to one group and a different price to another, you can learn which drives more sales or improves profits. It's a simple yet powerful way to make data-backed pricing decisions and understand what works with your audience.
Benchmarking is the process of comparing a company's performance, products, or services against industry standards or the best practices of other companies. In pricing, benchmarking involves analyzing competitors’ pricing strategies, cost structures, and profit margins. By evaluating how other companies price similar products, businesses can identify opportunities to adjust their own prices, improve efficiency, or enhance profitability.
Consumer behavior is the study of how people make decisions about what to buy, why they buy it, and how they use it. By understanding patterns like shopping habits, preferences, and motivations, you can create better pricing, marketing, and product strategies that truly resonate with your audience and meet their needs.
Conversion rate is the percentage of visitors who take a desired action, like making a purchase, signing up for a newsletter, or completing a form. It’s a key metric for measuring the effectiveness of your website, marketing campaigns, or sales strategies. By analyzing conversion rates, you can identify what’s working, optimize the user experience, and ultimately drive better results for your business.
Competitive pricing refers to how a product or service is positioned compared to competitors' prices. It indicates whether a price is higher, lower, or aligned with the market average. This strategy aims to increase sales by attracting customers while maintaining profitability and staying competitive. By analyzing competitors’ prices, businesses can adjust their own to remain relevant and achieve their goals.
Competitor monitoring is all about keeping an eye on what others in your market are doing - tracking their pricing, promotions, and product availability to uncover insights you can act on. By using this approach, you can fine-tune your pricing strategies, sharpen your marketing efforts, and stay on top of trends, making smarter decisions that help you stand out.
The competitor price index is a metric that compares your prices to those of your competitors, often expressed as a percentage. It provides insights into how competitively your products are positioned in the market compared to a specific competitor. By tracking this index, you can identify pricing gaps, adjust strategies to attract more customers, and balance competitiveness with profitability.
Cost Per Acquisition is a marketing metric that measures the cost of acquiring a new customer or lead. It is calculated by dividing the total cost of a marketing campaign by the number of conversions it generates. CPA helps businesses evaluate the efficiency of their marketing efforts and optimize strategies to achieve better results while controlling costs.
Days on Hand is a metric that measures how long inventory stays in stock before being sold. It helps businesses understand the efficiency of their inventory management and sales processes. A lower number indicates faster turnover, while a higher number may suggest overstocking or slow sales. Tracking Days on Hand ensures you can balance supply and demand, reduce holding costs, and improve overall profitability. The formula can look like this: Stock / average number sold last week
Deadstock refers to inventory that hasn’t sold and is unlikely to sell in the future. These items tie up valuable storage space and capital, making it important to identify and address them. Strategies like discounts, bundling, or repurposing can help clear deadstock and minimize losses, ensuring your inventory remains efficient and profitable.
Demand elasticity measures how people respond to changes in price. If a small price drop leads to a big increase in sales, demand is elastic. On the other hand, if sales barely change, demand is inelastic. Understanding demand elasticity helps you set prices that align with what your audience values, maximizing both sales and profitability.
A distribution channel is the path a product or service takes from the manufacturer or provider to the end user. It includes intermediaries like wholesalers, retailers, or online platforms that help deliver goods to customers. Understanding and optimizing distribution channels ensures products reach the right audience efficiently and cost-effectively.
Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a customer makes a purchase, the store buys the item from a third-party supplier, who then ships it directly to the customer. This model eliminates the need for inventory management and reduces upfront costs, making it a popular choice for e-commerce businesses looking for flexibility and lower risk.
A flexible pricing strategy that uses real-time data to adjust prices based on product tag, competitor behavior, and business goals. Dynamic pricing helps maintain competitiveness while protecting profit margins, ensuring your prices align with market trends and customer expectations for maximum impact.
End users are the individuals or groups who ultimately use a product or service. They represent the final step in the supply chain, where the product fulfills its intended purpose. Effective end-user strategies focus on understanding their needs, preferences, and behavior to create products and experiences that deliver maximum value and satisfaction.
Finance analysis is the process of evaluating financial data to understand a company's performance, identify trends, and support decision-making. It involves assessing key metrics like revenue, expenses, profitability, and cash flow to ensure resources are used effectively. Strong finance analysis helps businesses make informed strategies, improve efficiency, and achieve their financial goals.
A go-to-market strategy is a detailed plan that outlines how a company will bring a product or service to market. It includes defining the target audience, crafting the value proposition, selecting distribution channels, and planning marketing and sales tactics. A strong go-to-market strategy ensures a successful product launch, maximizes market impact, and drives revenue growth.
Gross margin is a financial metric that calculates the difference between a company's revenue and the cost of goods sold, expressed as a percentage of revenue. It measures a company's profitability and efficiency in producing and selling its products. A higher gross margin indicates that a company is able to sell its products at a higher price or produce them at a lower cost. The formula looks like this: (Sales price excl. vat - Cost price excl. vat) / sales price excl. vat * 100
A GTIN (Global Trade Item Number) is a unique identifier used to track and manage products across supply chains. It helps sellers, retailers, and manufacturers accurately identify items, both on shelves or online. GTINs make pricing, inventory, and product comparisons more straightforward and more reliable, ensuring everything is easy to find and consistent worldwide.
High-quality data is the foundation for smart decision-making. It should be accurate, valid, complete, timely, relevant, and consistent. When data meets these standards, it provides reliable insights that help refine strategies, improve efficiency, and drive better outcomes across pricing, marketing, and operations. Quality data ensures you’re always working with the best possible information.
Inventory management is all about keeping track of products to make sure there’s enough stock to meet demand without overordering. It involves monitoring what’s coming in, what’s selling, and what’s left on the shelves. Smart inventory management helps prevent shortages, reduces waste, and keeps things running smoothly for both you and your customers.
Just-in-time inventory is a supply chain strategy in which materials and products are ordered and received only as needed in the production process or to meet customer demand. This approach minimizes inventory holding costs, reduces waste, and improves efficiency, ensuring resources are used effectively without overstocking.
KPIs are measurable goals that help track progress and success. Whether it’s monitoring sales growth, ad performance, or customer satisfaction, KPIs give a clear picture of what’s working and where to improve. They’re like a roadmap, guiding you toward your goals with actionable insights along the way.
A loss leader is a product sold at a price so low it barely breaks even or even takes a small loss to attract customers. The idea is to draw people in with a great deal, encouraging them to explore other items with higher profits. It’s a smart strategy to boost traffic and build loyalty while increasing overall sales.
The manufacturer’s suggested retail price (MSRP) is a price manufacturers recommend to guide retailers and consumers on a product’s perceived value. It serves as a suggestion, with no restrictions on how retailers set actual selling or advertised prices, allowing flexibility in pricing strategies based on market conditions.
The marketing mix refers to the set of controllable elements that businesses use to promote and sell their products or services. Traditionally defined by the four Ps, which are Product, Price, Place, and Promotion, it serves as a framework for creating effective marketing strategies. By optimizing the marketing mix, businesses can meet customer needs, stand out in the market, and achieve their goals.
Marketing research is the process of gathering, analyzing, and interpreting data about a market, target audience, or competitors. It helps businesses understand customer needs, market trends, and potential opportunities. By using marketing research, companies can make informed decisions, create effective strategies, and improve their chances of success in the marketplace.
Minimum Advertised Price (MAP) is a pricing policy set by manufacturers to prevent retailers from advertising products below a set price, protecting brand value. In the U.S., MAP policies are usually legal under federal antitrust laws as they regulate advertised pricing rather than the final sales price. However, enforcing minimum advertised pricing in the EU and the UK might break competition laws.
Minimum product profit is the lowest amount of profit a company is willing to accept for a product. It sets a threshold for pricing to ensure that the product covers its costs and generates profit for the company. The minimum product profit takes into account the costs of producing and selling the product and the desired profit margin. It helps companies make informed pricing decisions and maintain profitability over time.
Net profit, also known as net income, is the amount of money a business earns after subtracting all expenses, including taxes and costs of goods sold. It represents the actual profit earned by a company and is an important indicator of financial performance. A positive net profit indicates that a company is generating more revenue than expenses, while a negative net profit means the company is operating at a loss.
Odd-even pricing is a psychological pricing strategy where prices are set just below a round number (e.g., $9.99 instead of $10.00). The "odd" pricing suggests a bargain, appealing to cost-conscious consumers, while "even" prices are often used to convey higher quality or luxury. This method influences perception and boosts sales by tapping into consumer psychology.
Penetration pricing is a strategy in which a company sets a low initial price for a new product to attract a large customer base and establish market dominance quickly. The goal of penetration pricing is to gain market share quickly and gradually increase the price over time as the product becomes more widely adopted. This strategy is often used by companies introducing new products in highly competitive markets to gain an advantage over established competitors.
Product lifecycle refers to the stages a product goes through from its introduction to the market to its eventual decline or discontinuation. The typical stages include introduction, growth, maturity, and decline. Understanding the product lifecycle helps businesses make informed decisions about pricing, marketing, and inventory strategies, ensuring they maximize profitability and adapt to changes in demand over time.
Price elasticity shows how much people’s buying habits change when prices go up or down. In e-commerce, it’s a useful way to understand what influences purchasing decisions. Products can be elastic, where small price changes cause big shifts in demand, or inelastic, where demand stays steady. Knowing this helps you make better pricing decisions and improve sales.
Price skimming is a strategy where a product launches at a high price to attract early buyers willing to pay more. Over time, the price lowers to reach a larger audience. This strategy helps maximize profits while balancing exclusivity and broader appeal in the long run.
The pricing window is the period a product or service remains at a set price before changes. It allows businesses to evaluate pricing effectiveness and adjust to market demand or goals. In e-commerce, pricing windows often shift multiple times a day, making frequent updates challenging but essential for staying competitive.
Psychological pricing uses strategies that appeal to how people perceive value, like setting a price at $9.99 instead of $10 to make it feel cheaper. It’s all about creating a sense of affordability or exclusivity, helping shoppers feel like they’re making a wise choice while encouraging them to complete their purchase.
ROAS measures how much revenue is earned for every dollar spent on advertising. It’s a simple way to see if your ads are pulling their weight. For example, if you spend $1 on ads and make $5 in sales, your ROAS is 5:1. Tracking this helps you understand what’s working so you can fine-tune campaigns and maximize results.
The second-cheapest pricing strategy involves pricing a product just above the lowest-priced option. This approach appeals to shoppers who want a good deal but avoid the cheapest option, assuming it might lack quality. It’s a clever way to position products as affordable yet higher value, attracting cost-conscious buyers without sacrificing margins.
Skimming pricing is a strategy where a product starts with a high price to attract early buyers willing to pay more. Over time, the price drops to reach a broader audience. This approach maximizes profits early on while balancing exclusivity with wider accessibility.
Slow movers are products that sell at a much slower rate compared to other items in your inventory. They can tie up valuable resources and space, making it crucial to identify them early. With the right strategies, such as promotions, bundling, or repositioning, you can turn slow movers into opportunities and keep your inventory efficient and profitable.
Target pricing starts with determining what your audience is willing to pay and then designing or sourcing a product that meets that price point. It’s a strategy focused on balancing value and affordability, ensuring the price feels right while covering costs and achieving your goals. It’s about meeting expectations while staying competitive.
A Unique Selling Point (USP) is what sets your product or service apart from the competition. It’s the distinct value or benefit you offer that resonates with your target audience. By clearly defining and showcasing your USP, you can attract customers, build loyalty, and stand out in a crowded market, ensuring your business remains competitive and memorable.
Vendors are businesses that sell products or services directly to consumers, either through physical stores or online platforms. They act as the final link in the supply chain, connecting manufacturers and wholesalers to the end customer. Keeping a good relationship with vendors ensures smooth operations, consistent stock, and opportunities for better pricing deals.
Vendor management is the process of building and maintaining strong relationships with suppliers to ensure smooth operations and reliable product availability. It includes tasks like negotiating contracts, monitoring performance, and fostering communication. Effective vendor management helps secure better deals, improve supply chain efficiency, and meet customer needs consistently.
Wholesale price refers to the price at which goods are sold in bulk quantities to retailers or distributors, as opposed to the retail price that consumers pay. Wholesale prices are typically lower than retail prices, as retailers typically add a markup to cover their own costs and make a profit. Understanding wholesale prices is important for businesses as they can use it to set their own retail prices and determine their profit margins.