 Hello, I'm Tom Flynn TV and in this video we're going to be discussing the importance of price within e-commerce So the first important reason as to why price is important is Customer choice the massive amount of customer sovereignty the power that a customer has due to Partly there is more competitors more people Actually selling very similar products, and this is because it's easy to set up websites It's more cheaper to set up websites as opposed to trying to open up a physical store and also it's worldwide people can buy products from anywhere So this creates a huge amount of diversification with the amount of people who are actually creating websites and selling products which means more Competition it's also important to mention that there is a lot of price comparison websites That your Category of products may fit into there's loads of websites out there that are actually collating information together like for say hotels etc. Travargo and Actually collating the price of all the different websites that do these and and that actually creates again more competition It's also important to note that the price Changes rapidly this is because with a click of a button a business can change the price of their product Which means that you've actually got to keep an eye on how much the price is for your product you've got to keep an eye on how much People are selling their products for because one day they might be selling it for you know 12 pounds and everybody might sell it for 10 pounds and another week they might be selling for 12 So you got to keep an eye on the industry in terms of the price The second aspect is customer price perceptions or customers are different Some customers might think a particular price is a bargain others may think it's a rip-off So you have to keep in mind your target market. Who is your target market? And you have to make sure that the price is Compatible with your target market and that's all to do with customer price perception Now low price could actually equal standard quality, but high price could equal high quality So it is really based upon the positioning of your brand if you actually have a low price People are going to think this is only probably a standard quality product And then that's going to affect your brand positioning is like sort of a standard brand So if you're trying to be a premium brand then the best way to do that would be to offer Eye prices because you want to be seen as quality Another aspect and this is so important is first-time buyers price is a key decision maker When a customer is using your online store for the first time This is because of no previous of experience, you know, they haven't used your site before they haven't they can't say oh, yeah The delivery was fantastic. Oh, yeah, it was great customer service, etc Oh the great packaging of the product They can't judge by that the only things you can judge by is the looker than the feel of the website The navigation of the website, but most notably for this particular video price What is the price of the product and it's also important to note that first-time buyers are very risk-oriented They want to have reduced risk for their first-time purchase because this is a website They don't know they've never used it before so a lower price reduces that risk Which makes it likely for them to actually purchase a product first time So this is why I actually would promote a pricing strategy That actually is about offering percentages off for first-time buyers and that way you actually bring in those customers in You've also got retention which is ensuring competitive pricing Which could actually have an impact on ensuring customers come back and purchase more product You know if you suddenly decrease the price or Increase the price should I say if you increase the price of the product this annoys customers retaining customers Can be very very profitable because you know if they're able to come back time and time again over the Year over a year or two years instead of just one initial purchase You know overall you're actually making a lot more profit So sometimes having lower prices can mean you know customers come back more often. So retention is really important Well, let's go to some sort of strategies Competitor based pricing is pricing that's based upon what your competitor is selling their similar Is selling their similar price or product for so if a particular price or product of your competitor Then you've got to make sure you match that you got to keep up to date with the price You've got cost based pricing This is the price that is based upon the unit cost of the product for the business in terms of how much it costs to make Or get a wholesale then you decide the price based upon how much our ROI return on investment You want in return You've also got customer based pricing which is based upon the perceived value of the product by the customer What is it worth to the customer and again like I said you can do this by doing some market research Now how much would your customer willing to pay for the benefits and value of the prop that the product actually gives So those are three strategies and this is these are also some just aspects why pricing is really important Hopefully I've given you something to think about Don't forget to like this video and subscribe and I'll produce more content in the future Thank you