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Why The Lowest Price Isn’t Always The Best Price

price comparison metrics

In America, studies by the Stanford Institute of Economic Policy Research and Minnesota University have demonstrated that the new easy price-comparison environment created by ecommerce means that online pricing for consumers and businesses is now more ‘elastic’.

So, whether you’re a wholesaler or manufacturer selling online, your customers are likely to be very sensitive to price.

Does this mean that you should always aim for the lowest possible price?

Data is at the heart of successful ecommerce pricing

China’s Alibaba is the leading online business-to-business marketplace. It liberally uses low pricing to gain market penetration, but has a great advantage because it can access products with low manufacturing costs. It also uses discounts to generate sales and improve customer loyalty. However, its astonishing 50% profit margin is achieved through value-added services such as fast shipping and handling.

To create a successful ecommerce pricing strategy you need understand your strengths and have access to reliable information to achieve the right balance between sales, revenue and profitability. However, Forrester Research recently reported that many businesses only use a third of the data they collect and few have in-house expertise to translate data and analytics into measurable business outcomes.

Understanding your whole business

When you use a platform like Cloudfy you can fully integrate orders, pricing, product and stock data with your back office systems. You can have access to information about customers’ behavior, the performance of your online channels and your business processes and costs. It certainly works for global supplier of discount ranges, OTL.

Cloudfy’s rich suite of merchandising and promotional capabilities allows you to create new sales opportunities using voucher codes, discounts and special offers so that you can test pricing approaches and learn what works best in a live environment.

Here are some ideas to think about:

The value of standing out from the crowd

Taking a strategic approach to your business’s ‘added value’ will make your customers less sensitive to price. Excellent customer service is essential, but you might also have a unique product range or provide a discount or free delivery for higher value or volume orders. Test your messages and offers to see what makes a difference.

Pricing to sell, not to lose

Chasing the lowest online price to gain volume sales can reduce profit margins to unsustainable levels. When prices increase, customers can easily disappear. Take a structured approach; use real-time sales data to check the results of price cuts or increases and be ready to demonstrate your overall return with some tightly targeted performance indicators.


With Cloudfy you can run timed promotions and offers that can appear on your ecommerce site at set times, or against certain criteria. For example, if a customer’s basket order value exceeds £1000, a free item can be added to the basket, a discount code offered or the entire order can be discounted by 10%. This type of tactical flexibility can deliver improvements to average order values and improve customer loyalty.


Cloudfy’s special offer and sales category makes it easy to price-test new seasonal lines throughout the year, including end of line stock clearance, special editions and preseason special offers.  You can quickly and easily set up special categories and tag products with an ‘Offer’ attribute so that busy buyers can easily browse and add them to their basket.

You will quickly build up a reliable source of data specific to your business. You can use it to inform your decisions about how to make the most of your opportunities, with pricing being just one consideration.

Contact us to find our more about creating a successful pricing strategy for your online business.

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