05 July 2009
Are you in search of the optimal 2 digits to fix after the price of each item you are selling online?
Before you set your price point cents, you should consider three things.
1. Should price point cents vary for discounted products?
2. What impact will the cents have on my key performance indicators(KPI) like sales revenue, net profits, ROI or market share?
3. Does your inventory / POS system support multi-tiered pricing across discounted products?
My favorite attention getting example is this simple math problem.
1,000,000 transactions times .11 cents = $110,000
If you set your price point cents at .88 versus .99 you will leave $110,000 dollars of potential revenue in the garbage can.
So, your long term pricing plan should monitor your competition in local markets, which will enable you to optimize price points intelligently.