Price intelligence does not understand sectors. We do not intend to suggest, with this statement, that the way of selling, of communicating, of preparing the rate structure, of defining the distribution mix or of limiting the competitive set, does not differ from one segment to another. A tourist accommodation, a rent a car and a perfume, to cite three examples, have different essences (pun intended), different buyers and different distribution channels.
But sellers of these three products (every retailer or wholesaler) must be able to implement a sustainable, predictive, dynamic, live and, as far as possible, automated pricing strategy that minimizes errors, enhances conversion of its stores and guarantee the profitability of its businesses. And for this it is essential that they control their stock, and that of their competitors, and that they analyze the evolution of prices, their own and those of others, in each of the marketing channels. The objective is be prepared to identify relevant changes and correct possible incidents, all in real time. If not, they are likely to make one, or several, of these 8 common pricing mistakes.
1. Price disparity: a classic
Almost certainly, the most common mistake, but not for that reason, the easiest to avoid or correct, far from it. While it is true that not all vendors seek parity, they do tend to have a preferred sales channel, accompanied by their own business rule. Sometimes it will be the direct channel, other times one that offers them greater profitability, etc.
But the price is always a possible conditioning factor, indisputably responsible for inclining sales towards one or the other. Losing control over it can be closely linked to the complexity of your distribution and the malpractice of your resellers, but it can also be a direct consequence of a lack of rigor on your part. Tools such as facilitate crack detection in your pricing strategy Y allow you to automate their correctionaccording to your own business rule (match the price if I am more expensive than x, always get x percentage cheaper than x, etc.).
Example:
This is seen a lot in the world of hospitality, where competition between intermediaries and the direct channel is fierce, and parity, or even positive disparity, are highly valued assets. Being able to easily identify a disparity, and to match in real time, the price of a website with that of an online agency (say, Booking.com), can give a definitive turn to the percentages of intermediated and direct sales .
2. I am the only one and I do not know it
The solutions of pricing intelligence They not only tell you about prices, they also provide you in relation to stock. Tracking the market in which you operate can give you many pleasant surprises, and not doing so can close the doors to very interesting strategic advantages, such as knowing that you are the only seller of a certain product, depriving you of the possible benefits associated with this condition.
Being aware of finding yourself in a scenario like the one described would allow you to take advantage of it. Being the only one, and there being demand, with a simple price increase, you could multiply the profitability of the product without, presumably, affecting your sales. And you without knowing it…
The ignorance and the absence of periodic comparisons between your stock and that of your competitionoccupies the Top 2 in the ranking of common errors in pricing.
Example:
Seasons, collections, lines, styles, etc. The fashion sector has one of the largest catalogues. If it turns out that you have, to say the least, a model of pants that no one else has, it may be that you are out of date, true. But it is also possible that you are a visionary. Still, it’s always interesting to know where you stand in the market. In the first hypothesis, perhaps, to remove the pants. In the second, to obtain the maximum profitability of your advantage position.
Something similar happens in the rent-a-car sector with special vehicles (convertible, 7 and 9 seats), which sell out well in advance even when stocks are very low in these segments, and could be made more profitable with the help of the right tool.
3. Why I got into this mess
What if it turns out that you are spending a lot of resources on a cause that doesn’t deserve it, at least not yet? This is another very common mistake, making a mistake when choosing the ideal time to put your inventory up for sale, and it is closely linked to not knowing the relationship between supply and demand.
His analysis will serve you on a silver platter a detailed map of the purchase intention, offer and price expectation of both parties. Controlled this information you will have all the necessary details to mark your tempo and find the optimal moment of sale. It would be something like retreating in time in a battle to end up winning the war.
Example:
One of the fiercest price fights occurs in the events sector. The fact of knowing the specific date on which it will take place totally changes the rules of the game and invites you to implement other types of strategies. For example, postponing the sale of your inventory until your competitors’ stock is depleted, and then putting it into circulation at a higher price knowing that as the event gets closer, attendees will be willing to pay more for their tickets, especially considering that tickets will be scarce by then.
4. What day is it today
There are seasonal products (tell Ferrero Rocher), others that are neither chicha nor lemon (I wanted it yesterday, I want it today and I will want it tomorrow) and also some that experience very significant peaks in demand and sales on specific dates.
The fourth common mistake in pricing strategy is not having a well-defined calendar in which the best times to release your inventory are clearly marked. A calendar that is prepared, mainly, through the analysis of the demand and the sales history. Once these key days have been detected, the most sensible thing is to intensify monitoring, launching searches every hour or even every minute, to make your prices dance to the rhythm of the market, to the sound of offers, promotions and the steps of your competitors.
Obviously, an intensification of the search work like this must inevitably go hand in hand with a dynamic pricing system, capable of reading this data and acting accordingly. Hardly a human will be able to review price reports every minute (or every hour) and edit the price of his stock based on them.
Example:
The sector par excellence associated with specific dates is cosmetics. Christmas holidays, Mother’s Day, Father’s Day, Valentine’s Day,… Dates on which every cosmetic brand should make sure to intensify the monitoring of the sites where its product is sold, and those that attempt against it, yes they do not want to miss out on those sharp peaks in sales.
5. Recommended selling price… or not recommended?
The king of the usual mistakes of those who sell, especially in marketplaces, lies in mark a recommended selling price that is well above, or well below, the actual price for sale in the market. A fault that once again puts the focus on the importance of knowing at all times who is selling your product according to your policy, and who may be undervaluing or overvaluing it, with the consequent damage to your brand.
Example:
If we say Amazon, everything has already been said. Recently, this Marketplace has been in charge of communicating its efforts to discontinue all products that were subject to false reviews, a widespread form of piracy. But it is not the only one and the sale price can be a good indicator to find possible scammers, counterfeiters or, simply, sellers who do not interest you. Make sure that your price, the official one, is respected to the maximum, and check it frequently so as not to be left “out”.
6. Come on, the shipping…
You are right. When setting prices, and also comparing them, all the costs that can affect the final price must be taken into consideration, and this is not always done, nor are all analyzers capable of rescuing this data. When you track, monitor and compare, don’t forget about shipping. The price of the product is not complete until it reaches the point of delivery, and the end user knows this very well and never tires of saying it: what is cheap can be expensive. Before we talked about price disparities, but they are not the only ones. There are also disparities in terms of payment methods, return conditions and, of course, shipping costs.
Example:
What I describe below has happened to a server and I am referring, again, to the fashion sector, although, like the rest of the errors listed, other fields also occur. The thing goes like this: I access the official website and I find the same price as in another store. Difference? The official website charges me shipping costs, the other business does not. Consequence? I buy in the other store.
7. I have gone from cheap
Enjoying the best price is a great help to stand out from your competitors. However, sometimes the difference is such that you are missing out on a golden opportunity. A much more common mistake than we could imagine is to sell well below the price at which you could do it. That is, you are so much cheaper than the others, that even if you decided to raise the price, you would still be the cheapest alternative.
Example:
Let’s imagine that your favorite channel is El Corte Inglés and your star product, the top seller, wins the battle of street prices. A tool like Price Seeker can make you understand that this product does not have a competitor to match, because the price difference is more than significant, and the margin you have to go up is very wide. Doing so will not entail a risk and said increase will reflect a direct impact on the income statement.
8. One is not the same as five
Sometimes. Just as in the hotel sector, beyond the fact that long-stay or 3×2 offers can be worked on, the price per night is the same for a one-day stay as for a five-day stay. But this is not always the case, and it is also a value that can fluctuate a lot depending on the time of year.
The last common mistake on this list is related precisely to the fact that not taking this factor into account when monitoring prices, which leads us to make a mistake when defining ours, by taking as a general reference a price that may not be representative at another time of the year. Again, the demand analysis is final.
Example:
The rent a car sector is a clear example of how prices can be very different depending on the rental days, and some price monitoring tools fall short on this point. Searches must contemplate the price in all these…