All about fashion ecommerce pricing techniques
People love purchasing in their local currencies as an integral part of the localized shopping experience. With the borderless world that we live in today, purchasing, shipping, and receiving goods—all of which take place in the currency we prefer—have only gotten more seamless than ever. In addition to your goal of providing a localized shopping experience, you may get the chance to increase your profit to a much broader extent. But only if you set your prices wisely.
Let's start with multi-currency pricing.
1 out of 7 online transactions is said to be conducted across borders.
Once you take away the consumers’ freedom to browse your products in their home currencies, it could then be the end. Your pricing strategies should work on your customers’ side more often than not. In return, there will be less possibility of your business recouping what you could lose—profit.
Now, before you go global and dominate markets, allow us to get you to the basics of multi-currency pricing. Learn about how to do it right and other pricing options that are essential to bringing strong cross-border presence and conversion.
What is multi-currency pricing?
Simply said, it’s a method by which products become available in different currencies. International retailers, who could be you, are in efforts to make the business work for outside markets. And by work, it means not just translating the content but adjusting the pricing as well. This method then builds trust in the customers’ idea that purchasing internationally is a safe and comfortable decision — part of an effective localized shopping experience.
A prediction by Forrester Research says that cross-border ecommerce sales will reach a whopping $627 billion by 2022. It’s going to be a dramatic increase from $284 billion back in 2017.
The data directly suggests that if you want to take advantage of boosting your sales across borders, you’d also want to hold on to the power of foreign shoppers who recognize their right to localization (i.e. browsing products in their language and paying in their currency).
With a balanced effort, you can maximize your bottom-line by gaining more profit in wealthier countries—not just a straight conversion. But that’s not it yet, there’s still so much that multi-currency pricing can unfold for your business.
Benefits of multiple currencies
Besides, of course, being available to foreign markets, you are also establishing your brand to become part of your customers’ local lifestyle through multi-currency pricing. Therefore, it opens your business to endless opportunities to reach more, farther destinations.
Your business isn’t truly crossing the borders (not literally, obviously) if your customers cannot pay you in their local money. Since we’re international by nature, we help you go global without the hassle. Stylehub lets you offer your products in multiple currencies, which allows your international customers to shop with ease and confidence. What’s a better way to become global market-ready than being able to lay multiple currencies for different shoppers to choose from?
Transparency, reduced cart abandonment
Seeing an odd currency, plus changed price, plus an additional fee for paying in the store’s local currency at checkout is not a typical surprise anyone would expect.
Customers want to shop smoothly without extras they never saw coming. Otherwise, you’ll earn cart abandonment rates that may supposedly be your total sales for the month. Multi-currency helps you build your social proof by being transparent with how much customers are really paying for what. All at real-time rates. It enables international retailers to gain trust from new and repeat customers, which takes us back to...
Localized shopping, better customer experience
When localizing a business, setting your currencies is a much easier task to manage than translating your content. Now, even without installing third-party apps or plugins, our pricing management makes this cross-border effort even more hassle-free for you, and just the right blend of local for your foreign audiences.
76% of shoppers look for sites that sell all their products in their local currency.
Multi-currency pricing sets your way towards the goal of a successful conversion. Yes, translating every page of your website is a smart move that customers will benefit from. It will help them understand your products and meet your brand on a more personal level than just reading the texts in the English language.
As part of an effective localized shopping experience, however, your prices must also feel native to the customers. And by applying multiple currencies to your target international markets, you’re avoiding the hassle that customers may face by opening another tab just to convert your prices.
This is a make-break act. But when implemented correctly, shoppers are in for an elite customer experience that feels right at home. On the side of international merchants, they are guaranteed some tremendous rise in the conversion rate.
You can tailor your prices to your market
One of the benefits of multi-currency pricing is that it allows you to gain more profit just by being intentional to the market you plan on selling to. You don’t simply set your prices depending on different currency symbols each country owns. The location and market behavior are only some common factors (which we will discuss further later) that determine how you would want to price your products.
Good thing Stylehub understands your goals. With us, you may set up your price lists for each of your products, in different currencies if you like. Having your prices set to meet a market system gives you an edge to sell graciously.
How to increase your bottom-line by tailoring prices to each market
After you converted prices to multiple currencies, you also want to make the most out of each country on your list. And the best way to do exactly that is by understanding and acting on how pricing affects your customers’ behavior and your revenue.
To make sure you’ll successfully boost your overseas profit over time, here are some strategies that you should consider applying to make better pricing decisions.
If you’re quite uncertain of your first moves, don’t hesitate to learn from your rivals. You want to know how other businesses alike price their products through competitor research and by gathering such information. This would also tell you how their items are classified between low end, middle end, or high end, and determine your own positioning.
The comparison will be there so as to evaluate your products’ quality and how it differs from theirs. It will also be an advantage for you to be able to identify the latest market trends to help you price lower or higher from the competition.
Now that you have gathered and assessed your competitors’ pricing strategies, it’s time to apply them to your own products and test how the market reacts. By making minimal price changes, you’ll be able to measure which pricing technique captures the shoppers’ attention more, and which doesn’t.
However, you want to keep in mind how your pricing affects customer perception. Prices that are too low could signify that your products are of low quality, while prices that are too high could intimidate your customers into thinking of looking for shops who offer the same products at a much lower amount.
Cost + markup
One of the most common pricing strategies out there. With this one, you need to determine how much your products have cost you to produce and fulfill. Then you want to decide on how much profit you want to make for each product by adding it to the overall price.
Again, remember to protect the perception of the shoppers to the quality of your products. You should earn a profit that’s enough to recoup your expenses and establish your reputation, but also just right to make your customers come back for your business.
No one’s losing here unless you let your business. Loss leading pricing is a technique that attracts more first-time customers by availing your products or services at or below your cost. Through irresistible offers, you may get the chance to make up for all your expenses for the first time. You want to apply this strategy if you believe these new customers will come back ready to purchase a variety of items or higher-ticket items over time.
Your prices have a psychological impact on the customers, that’s why this strategy is also known as psychological pricing. By having your prices end with odd numbers, shoppers mostly get the tendency to make impulse buying. For example, if you price an item at $6.99 instead of $7, a customer’s perspective will see $6 and not $7. Now, that makes the item appear like a better price for the customer.
It’s true how some products in the market are priced significantly higher than most goods alike. This is because retailers are aware of how a prime image can trigger other customers to think that the item is top quality.
This can also get tricky because although there are shoppers who’d rather pay more to get premium products, it’s inevitable how there are ones who’d still prefer for the lower price. It’s really about providing high perceived value while truly giving quality features the customers are expecting.
So before you claim that your products are at their highest standard, you have to be sure that the quality really is. A high-value perception doesn’t call for deception.
Now, who doesn’t love saving a little more money? It’s sales, coupons, and other markdowns for us. A study by Software Advice stated that discounting is a top pricing method used by 97% of retailer participants. And you can tell pretty much the reason for the population of businesses who apply this strategy—it works for them and the shoppers, too!
This technique is certainly loved by many because it’s also a way of giving back to the customers for making large purchases from your store. By making special offers to repeat customers who bring a great volume of purchases, you’re never missing a profit.
But you need to apply this discounting method for specific items on your website, right? We make it effortless for you. Our price management solution allows you to provide discounts easily for your customers based on the number of purchased products. Simply identify the items you’re putting on discount and let us take care of the rest.
We know what you’re thinking, but this isn’t exactly like the previous one. Bundle or package discounts apply to different sets of products that can complement one another.
You may do this with a body wash, then salt scrub, then body lotion, all from different brands if you wish. Through this method, shoppers can get the three unique items all together for a much lower price than buying them separately. Offer it on your next seasonal sale or marketing campaign. It’ll surely build a sense of urgency for the customers.
This next strategy may work for products that have two to three or more versions. Say you own a shoe line where sneakers are your primary products. Because of new market trends, you decided to make a leather edition of some of your canvas sneakers. This move allows you to increase your revenue by giving customers the option to purchase different versions of the shoes they may have already bought from you. Know anyone who’s a sucker for kicks?
On the other side of this technique, you want to make sure that the versions you’ll make possess significant features that aren’t found on the original ones. For example, a water-resistant or an anti-slip rubber outsole.
This can cost you additional expense from producing, but with the right features and pricing, your bottom-line will reach the top.
If your business has a large inventory, you may want to make sure not to let any items get left out inside the stockroom. Closeout pricing or clearance sale lets you earn profit from excess inventory through “liquidation sales”. You want to identify items that aren’t selling well and offer them at a lower price just to get them sold out. Or maybe because you want to make room for new releases, which helps emphasize fresh items as well.
It may not be a long-term strategy but still works effectively in clearing out your old inventory and squeeze in some profit.
As much as these pricing strategies are useful for increasing your bottom-line over time, you may also notice how there are risks in implementing any of them to your business.
You might be asking, “Which strategy should I use then?”. The answer will depend on your type of business, target area, level of competition, market interest, and market behavior. Don’t be afraid to test out some of the strategies mentioned to see which ones would give you long-term results. Also, time is an important indicator of your business transition. You should always be on the lookout for new ways to engage your customers to convert. Eyes on the profit no matter the distance!
Other pricing opportunities
The aim is to make your prices fit in wherever markets you plan on selling to. But there are way more options than just setting prices in different currencies that actually work.
From the given pricing strategies above, you probably have gotten initial ideas on what methods you need to take for your own product pricing. It’s been said and done how easy it is to convert solely your prices. But it will not be easy to make the customers understand and adjust to such changes. You want to make sure that your pricing strategies will pay off successfully instead of getting the best out of your business.
Take another look at these two other pricing opportunities that can help you set your prices better and maximize your bottom-line.
This ensures that your prices reflect the economic and geographic conditions of your target location. Local currencies help local shoppers to spend an amount of money that’s just about right to their own standard of living. With 73% of shoppers who want to pay in their local currency, it’s going to be a serious deal breaker if you neglect the opportunity to boost your sales.
You can set different currencies and prices for each region to make sure that your pricing is intentional. StyleHub’s feature gives you the ability to do this and use the same currency and price for multiple countries.
For instance, you may offer products in NOK in Norway, EUR in the eurozone, and also offer your products in EUR but on different levels in Hungary. This is the best way for you to measure your pricing techniques, all while being purposeful in each area. Besides, you can do regional pricing seamlessly using our platform, so there’s no need for manual effort.
Another thing to consider when doing this pricing opportunity is the one common example every international shopper encounters. The cost of local tax and delivery. Sometimes, there are items that are priced a bit lower than the amount you have to pay for the shipping. This leads to cart abandonment and missed profit. It’s a good solution to adjust your prices to local tax and shipping rates, so shoppers aren’t expecting the unexpected. This also helps your business to manage the amount you spend trying to meet additional regional expenses that are too much for your allotted budget.
Here’s the deal: If you buy more—the second, third item’s price will be lower. As much as the customers are after saving more, they still get caught up in this strategy by going home carrying tons of items. Because after all, they’ll be able to buy in high volume by paying less, right? Crazy shopping for things.
This second pricing technique often applies to volume pricing where merchants identify the price per unit within a range. By applying this method, the price per unit decreases when the quantity within particular “tiers” increases.
How tiered pricing works
Let’s try illustrating the picture of how this strategy works.
Say you’re a retailer who sells winter clothing and you want to increase the sales of your scarves.
The first 1-20 units would cost $9 each. The next 21-30 units would cost $7.5 each. And the next 31-40 units would cost $6 each. The scarfs’ final price would then be $4.50 for each item once these tiers have been filled.
Although this may be just an example, it could teach you how prices move up and down as the unit moves interchangeably. Retailers have the chance to increase their average order value, along with customers who are convinced to purchase in huge quantities at a lower price for each item.
This strategy, therefore, serves as an advantage for the sellers to offer the market different product options, and for the shoppers to select a particular option in which they can afford. It’s going to be a win-win transaction that improves the bottom-line of the business and the customer experience and satisfaction of the shoppers.
The doorway to a broader reach
Deciding on expanding your business across borders means you’re aware of the expectations the international customers may have in mind. That being said, you want to be strategic in meeting these expectations, all while meeting your own business goals, without crossing over the limit.
Because you’ll be dealing with a lot of different markets, you need to take a lot of different approaches to best transact with them. And making multi-currency pricing available will certainly be one of your biggest assets to make it successful.
This cross-border effort will require you to conduct a good deal of research on the market’s identity, behavior, and interest. By doing so, you’re allowing your brand to dig deep into their nature and set your prices in ways that’ll keep them looking for your business.