Comprehensive analysis of cross-border e-commerce pricing strategies: cost, competition, value and mental accounting

In cross-border e-commerce operations, pricing strategy is an important part of the company’s success. Good pricing not only attracts customers but also achieves marketing goals. This article will synthesize different pricing strategies, including methods based on cost, competitors, product value, and mental accounting, in order to provide a comprehensive reference for cross-border e-commerce sellers.

Cost-based pricing strategy

Cost-based pricing is currently the most commonly used pricing strategy. The advantage of this method is that it is simple and easy to implement. Sellers only need to know the product cost and expected profit. In this case, the product price is calculated as: Product Price = Cost + Desired Profit Amount. For example, if the total cost of a shirt is $14.50 and the seller hopes to make a profit of $10.50, the shirt should be sold for $25. This strategy can effectively avoid losses, but may also reduce profits in some cases, because if the price is too high, consumers may abandon the purchase.

Competitor-based pricing strategy

Another common pricing strategy is competitor-based pricing. This method involves monitoring and analyzing the product pricing of direct competitors in order to adjust your own prices accordingly. This strategy is most effective when the products are exactly the same, but it may lead to intensified price competition and form a “price war.” For example, if Seller A discovers that a competitor is selling the same product for $289.90, he may choose to lower the price further, causing profits to be quickly compressed. Therefore, sellers need to be cautious when using this strategy to ensure that profitability is not compromised.

Pricing strategy based on product value

Pricing strategies based on product value require sellers to conduct in-depth market research and consumer group analysis. This approach emphasizes the importance of understanding consumer purchase motivations, focusing on product features, and considering the impact of price in the purchase process. Sellers must make detailed pricing adjustments for their products and continuously optimize price settings with a deeper understanding of the market. This approach often achieves higher profit returns because it is based on consumers’ perception of true value.

Pricing method based on mental accounting

When consumers purchase goods, they will make a psychological distinction between their expenditures and benefits, which is called mental accounting. Therefore, consumers’ psychological feelings in different scenarios need to be considered when pricing. Effective pricing methods can be divided into several strategies:

1. Full discount or free gift: For example, “40 yuan off for purchases over 199 yuan” or “40 yuan coupon for purchases over 199 yuan”. This form can enhance consumers’ desire for transactions.
2. Combining the bad with the good: Notifying consumers separately of negative information and positive information can increase the success rate of promoting transactions.
3. Emotional design: The pricing of products also needs to take into account the emotional value of consumers. When the product is positioned as a “gift”, it may result in a higher premium.

To sum up, when formulating pricing strategies, cross-border e-commerce sellers should flexibly use the above pricing methods according to market changes and consumer behavior to achieve the best marketing effects and profitability.