Cross-border e-commerce B2B business usually sells goods to channel dealers, and the terminal retail price must also be considered. Due to different trade terms, international trade also involves FOB prices (free on board) and other factors. Considering the different product positioning, according to the product portfolio pricing strategy, a store’s products will have different pricing targets. In short, when we start cross-border e-commerce business, we should establish a complete product pricing system.
For example, in the operation of cross-border e-commerce stores, product pricing must be divided into traffic-generating models, flat-selling models and profit models. The role of products at different price levels should be distinguished.
(1) Traffic-generating models: Combined with product costs, product prices should be lower than market prices. This product will bring traffic to the store. The traffic-generating models of the store are priced below the target customer’s psychological median price. The calculation formula is as follows.
Pricing = low price + (high price – low price) x floating coefficient
However, depending on the degree of product differentiation, the floating coefficient is generally between -0.4 and 0.4. The specific value of the floating coefficient needs to be determined based on actual conditions. It should be noted that in actual application, the pricing fluctuation of the traffic-generating products is generally reflected in the form of discounts.
In addition, as the sales volume of the traffic-generating products increases significantly, if the merchants take advantage of large-scale production, the cost price of the goods will be greatly reduced, and the merchants will have more and more freedom in pricing. Merchants are likely to obtain absolute price advantages and break through the original pricing rules, thereby consolidating the product ranking and related competitiveness of the traffic-generating products at prices lower than those of competitors.
(2) Flat-selling products: daily sales products. The product price should be kept in line with the market price to ensure the daily sales of the store. Flat-selling products can be directly priced using the psychological median benchmark, and the calculation formula is as follows.
Pricing = low price + (high price – low price) x 0.618
(3) Profitable products: The product price should be higher than the market price to ensure the gross profit of the store. The calculation formula is as follows
Pricing = low price + (high price – low price) x floating coefficient
In the formula, the floating coefficient is generally between 0.75 and 1. Generally speaking, the pricing of profit products is usually 10%~60% higher than that of traffic-generating products. (4) Image products: Image products are designed to enhance the store’s image and increase consumers’ sense of value. The calculation formula is as follows.
Pricing = low price + (high price – low price) x floating coefficient, where the floating coefficient is generally between 1 and 2. There will not be too many of these products in a store, usually 1~2. When pricing based on product positioning, it is important to note that in actual applications, product positioning and pricing affect each other. When pricing new products, you can set prices based on the preset product positioning. You can also naturally form a product positioning after testing new products, and then adjust the product price based on this pricing strategy to match the product positioning with the pricing.