5 Reasons Why Your Retail Pricing Strategies Aren't Working


Regardless of product or industry, pricing strategy is deservedly one of the most deliberated aspects of any business. While many businesses today search for the fabled sweet spot that will easily bolster profits, they oftentimes fall victim to the same old-fashioned pricing mistakes.

More and more, organizations are realizing their once viable strategy no longer works in our ever-evolving marketplace. Given the ultra-competitive nature of eCommerce, the necessity to optimize is even greater.

For a business to stay ahead of the game today, they need to proactively identify what changes they’ll need to make, and when they’ll need to make them.

In this post, we’ll discuss some of the most prevalent (and often unseen) reasons why your pricing strategies aren’t working.  

1. Uniformly changing prices across the board

The value of a product isn’t static, and it can vary by region, customer segment, and other external factors that include competitor price changes and seasonality.

Raising prices may exclude customers that would buy at a lower price, while lowering prices could mean losing profits from customers willing to pay a higher price. So, by uniformly changing a product’s price across the board, you’re leaving money on the table.

2. Basing price on cost alone

Cost will always be an important component of pricing, but it shouldn’t be the only factor, especially when you consider the deluge of sales and customer data retailers have today.

Costs provide a lower boundary for a product’s price, but retailers should take a broader view of their product’s place in the market beforehand, to determine the role it will play in their business strategy.

It’s important that retailers understand the elasticities of their products, and their perceived brand value. These afford necessary insights for placing premiums on certain items, thereby maximizing profits.

3. Not offering various prices on different product options

Consumers today have an array of options when shopping, and retailers should offer multiple price points for various versions of their product. This can include colors, fabrics and customizations on the product side, and different options for shipping and delivery during check-out. 

Customers expect personalized experiences, so by customizing the product and delivery selections, they’ll feel more active and involved in their purchase. In turn, this can increase customer loyalty and improve the perception of a brand.

Moreover, multiple price points can help capture additional profits in that some customers might pay more for premium options, while others are content with a standard purchase, and would walk away if forced to pay for bonuses.

4. Handling pricing errors

Pricing errors happen and sometimes employees make mistakes when calculating markups and tagging items for price and promotion. The impact pricing errors have on profits, though, oftentimes comes down to customer service.

Employees need to be trained to better correct pricing errors in-store. When a customer has an item that’s tagged with an incorrect price, the remaining inventory should be re-tagged immediately. Similarly, store managers should be trained on price calculation, and how to best handle complaints from customers.

5. Poor communication between marketing and merchandising

Today’s biggest retailers oversee hundreds of stores throughout the world, in addition to their eCommerce sites.   

While it’s commonplace for marketing to control customer acquisition, and merchandising to run in-store product placement, a lack of communication between these teams generally results in lost sales.

Consider marketing focusing on promoting low-value or low-inventory items. This puts unnecessary pressures on merchandising. Conversely, merchandising may display items that haven’t been featured in marketing campaigns.

A single source of truth (SSOT) — a centralized database with up-to-date pricing and inventory information — is vital for marketing and merchandising to base their decision-making strategies.

Pricing strategy in the age of automation

The bottom-line here is if your pricing strategy isn’t data-driven, it’s inadequate, and price optimization is an open-ended process that requires modifications over time. 

By identifying the sources of your problems today, and then properly instituting corrective measures, you can get ahead of your competition. And with an ever-proactive, data-driven approach, you’ll stay ahead.


Antuit enables you to predict and measure how pricing levers will impact your demand, revenue and margin. Learn more here.

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