Tips from the Top: How to Price Products to Beat Your Competition

When it comes to running your online business, you naturally want to make big profits. But in a world where shoppers expect steep discounts and big promotions, it’s important to form a competitive pricing strategy to stay balanced.

To help you get started, we sat down our very own Cris Angelini, Director of Revenue Development, to discuss the best ways to competitively price your products while staying profitable.


What are best practices for putting together pricing strategies?

First, determine what your business goals are. Many small businesses share the same goals: to grow and remain profitable.  Pricing your product boils down to two main components which are: 1) supply and demand and 2) costs.

When initially setting your prices, make a thorough list of all costs. Typical start-up costs might include:

  • Products and services
  • Additional costs associated with your business
  • Building your website
  • Hosting domain
  • Employee costs
  • Shipping
  • Credit card processing fees
  • Costs incurred for damaged products

Next, look at the market to determine if other companies are selling similar products. If so, do you have a competitive advantage that allows you to safely price these products higher than your competition?

For example, if you’re selling new release music and movies, you’ll probably face stiff competition from mega retailers like Amazon, which makes it more difficult to convince customers to purchase from you, even with a great discount. However, if you’re selling a niche product like vintage records, where supply and competition are limited, as long as you drive traffic and have a trustworthy site, you’re more likely to see success.

Keep in mind that you may want to offer promotions in the future, so it’s a good idea to include a cushion to account for these discounts.  Run through the exercise mentioned above if you decide to make pricing changes due to a shift in the competitive landscape, new costs, or a change in business goals.

You may also decide to price some of your products as loss leaders. It might make sense to take a loss on a product if you think it can generate additional sales in the future. For example, shaving razors are sold at a loss to ensure that you continue to purchase the matching replacement blades.


What’s the best way to track the performance of pricing strategies?

Anytime you change prices, you should understand its potential impact. To do so, frequently review your sales numbers to determine if the changes are having the desired effect. One note of caution: a price change may take longer than you realize for impact to occur.

For example, let’s say I buy new running shoes twice a year. If the store I buy them from makes a pricing change, it could take me upwards of 6 months to notice the change.  For this reason, it’s best to email your customers about pricing changes, as well as increase your advertising spend to help get the word out.


How deep should a discount be?

You should only discount your products if it helps achieve your business goals.

Most of the time, you probably don’t want to sell a product at a loss. However, if you’re clearing out inventory from last season, it’s often better to discount these items so you can free up funds that are tied to old inventory and use them to purchase new products.

Selling at a loss can also lead to additional sales, which is common on Black Friday. Many times, the low prices advertised are used to bait customers into the store with the objective of getting them to buy additional items at full price. If your goal is to simply give your sales a boost, then determine the goal for additional sales and the discount you feel would be necessary to achieve that goal.


We hope this expert advice will help you create a pricing strategy that best suits your online business. Be on the lookout for part two of Tips from the Top with Cris filled with insights on developing a business growth strategy, coupon timing and more.

Happy selling!


Director of Revenue Development Cris Angelini, Director of Revenue Development is primarily responsible for the ideation and implementation of projects designed to maximize the long term profitability of the company as well as execute plans to ensure that quarterly revenue goals are met.

 After a successful career in sales, most recently online advertising sales at Citysearch, Angelini joined the Volusion team in 2006.  His past responsibilities cross almost all of the organizations lines of business, overseeing services, business development, sales and merchant services organizations as well as a stint in the early days of the marketing department.  He has received numerous awards for his service to the company including the Team Player Award in 2008 recognizing the best manager in the organization for his service managing the sales team, and the Trailblazer award the same year acknowledging his efforts helping launch the Merchant Services division.  His experience in all aspects of the organization as well as his knowledge of the industry have allowed him to implement many new processes and give him a unique opportunity to serve the company in his current role.

Angelini is a graduate of the University of Texas at Austin’s McCombs School of Business and holds a BBA in Finance.


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One Response to “Tips from the Top: How to Price Products to Beat Your Competition”

  1. David Bellinge

    Thank you for your advice. I am just starting and I need all the information i can get


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