Cross-border e-commerce companies often think about pricing. In other words, the premise for many cross-border e-commerce companies to do cross-border e-commerce is to determine the pricing of their products. Pricing is not an easy task. For cross-border e-commerce companies, the wrong pricing method may cause both profits and sales to be lost. The following introduces three cross-border e-commerce pricing strategies to help cross-border e-commerce companies achieve both orders and profits.
(I) Skimming pricing strategy
The skimming pricing strategy refers to the pricing strategy that companies set the price of products very high when new products are first launched on the market, so that they can earn the maximum profit in the short term. The original meaning of “skimming” is to skim the cream from milk, which is used as a metaphor for making profits, so it is also called the “high price and high profit strategy”. The reason why companies can launch new products into the market at high prices is mainly because they take advantage of consumers’ desire for novelty.
1. Advantages
(1) It can improve product pricing and establish a high-end and high-quality image for new products.
(2) It is easy to cater to the purchasing psychology of consumers who pursue quality and fashion, and leave room for lowering product prices in the future, so that companies can take the initiative in price adjustment.
2. Disadvantages
(1) Excessively high prices can easily scare off consumers, making it difficult for companies to expand their market. (2) High product prices and high profits can easily attract a large number of competitors.
3. Prerequisites
(1) In the market, a considerable number of consumers have low elasticity of demand for products. (2) The new technology used in the product has not yet been made public and is exclusively produced. (3) The cost and expense of small-batch production and sales of products are not high.
(4) It has a good marketing strategy and high advertising ability, which can arouse people’s curiosity and desire to buy. For example: Shopee is one of the fastest-growing e-commerce platforms in Southeast Asia. With the huge consumer base in Southeast Asia, it has huge market potential. If companies want to make higher profits than others on Shopee, they need to choose products with less competition. Usually, new products will always attract a lot of attention when they are launched, and the initial price of the product will be relatively high. However, in order to sell new products quickly, companies need to pay attention to the upcoming products and put them on the shelves before other companies, so that they can make higher profits when they are sold.
(II) Penetration pricing strategy
The enterprise launches new products at a low price with little profit, no profit or even loss, so as to quickly open up sales in a short period of time and occupy the market as soon as possible. After gaining a certain degree of control over the market, it gradually increases the price according to the change of situation.
1. Advantages
(1) Use price advantage to win over consumers, quickly occupy the market, and effectively exclude competitors from joining. (2) With the increase of sales volume, the expansion of market share and the reduction of costs, profits can be increased.
2. Disadvantages
The investment recovery period is long and there is little room for price reduction.
3. Prerequisites
(1) The enterprise has strong production capacity and can meet market needs. (2) The price demand elasticity of the product is large.
(3) The production cost and operating expenses of the enterprise will decrease as the production and operation experience increases. (4) Low prices will not cause actual and potential competition.
Use low prices to attract customers and make profits by selling more. Every store has traffic-generating products and profit-generating products. Traffic-generating products are priced low, and their main purpose is to attract traffic to the store. The seller does not make any profit or even loses money. However, the attracted consumers sometimes do not buy only one product, but often choose to buy a combination. In this case, combination pricing can be used: the seller can set a hard indicator of a certain amount before shipping, so that the overall price is not high and consumers do not mind buying more; or adopt combination sales, so that when consumers buy one product, they need to buy it together with another product; or a single product is very cheap, but it must be purchased in combination.