Forum Moderators: buckworks
I'm thinking of following this model, but there are two questions which I need your opinion on:
1) Will consumers get mad / abandon the cart when they see ground shipping is $15 or more!
2) Is it better to have a lower price at first glance? Consumer's who price shop must choose my competitor sites over me (before checking shipping fees). I am currently at an unfair advantage on bizrate.com if consumer's sort by price.
I have 4 options on how to proceed:
1) I can remain w/ my current pricing model -- which is moderate prices compared to my competition with honest shipping fees.
2) I can charge bare bone prices, but charge very high shipping fees to make up for the low priced items.
3) I can RAISE my prices and offer free shipping.
4) I can RAISE my prices and offer honest shipping fees. Orders would decline, but the higher profit margins might bring in more money in the long turn.
Thoughts?
1) Will consumers get mad / abandon the cart when they see ground shipping is $15 or more!
2) Is it better to have a lower price at first glance? Consumer's who price shop must choose my competitor sites over me (before checking shipping fees). I am currently at an unfair advantage on bizrate.com if consumer's sort by price.
Once again, depends on your customers and your particular niche. A/B split testing will answer this one -- IMHO, people are wise to shipping costs. They know that "free shipping" is a marketing tool for saying "freight included in price."
4) I can RAISE my prices and offer honest shipping fees. Orders would decline, but the higher profit margins might bring in more money in the long turn.
Low prices can be justified, if you oranize some sort of "club" -- i.e. with quarterly or yearly subscription fee that gives its members a lower price advantage. "Non-members" still can buy at your usual prices.
That would eliminate your pain with bizrate, and other comparison sites, if you give there "members" prices along with "normal" prices. Heh :-)
One good thought with "Free shipping" could be "Free shipping on orders over $$$". That way customers feel you do not overprise, but stimulate to buy more. Perhaps, they even will buy more?
The sad thing about all this is that no changing pricing policy gives you overnight results. You already have some solid customers base, that prefers you over your competitors. Changing pricing models will possibly rotate your customers base -- a slow process that might take years to compete...
[edited by: Morgenhund at 11:10 am (utc) on Nov. 20, 2008]
e-commerce website that brings in about $500k in sales a year
So what do your competitors sell? How can you know? Maybe their tricks get them sales of $100K per year - maybe $1M per year. It is impossible to know. You should really consider some sort of A/B testing of different pricing models. Try different experiments to see what happens. It is really the only way to do it.
I would go with the people who say raise your prices. It is scary to do, but I have been doing this, and it does result in fewer sales but higher ticket amounts. That's fewer fees for you, just for starters. I intend to raise my prices further after the beginning of the year.
