Should You Use a Low Price Strategy in eCommerce?

8 min read

Retailers, whether online or offline, use many strategies to set themselves apart from the competition, to attract customers. Pricing is one of the main factors that influence a customer’s decision to purchase, so competitive pricing strategies are the most commonly used approach.

Low Prices or Competitive Pricing?

Your pricing depends on your market position. If you are selling premium branded items, you cannot constantly sell your products at low prices. If you are dealing in groceries and household items, you can probably always sell a select few items at lower prices.

Low Price Strategies

A low price strategy can work for everyone, even for premium brands, as long as it is used well. Some competitive pricing strategies commonly used:

Lower Prices on a Regular Basis: For frequently bought items like groceries, household supplies, etc., you can always sell many of the items at lower prices than your competition to attract more customers and increase sales volume.

Markdown Prices: If you have a new set of products coming in from the brand you sell, mark down the prices of certain older items that you know your customers would be interested in. This could attract more buyers who could not afford the original price.

Discounts: You can provide seasonal discounts, special discount sales, exclusive membership discounts, customer reward discounts and so on. You can do this whether your e-commerce business focuses on exclusivity or whether it caters to the price conscious buyers. Everybody loves a discount, even those who normally buy high-end brands.

The Downsides of Low Price Strategies

If not implemented correctly, a low price strategy can have negative effects:

  • Putting a low price tag on your products can make some customers perceive the products as inferior, not worth buying, or not worth the regular price it commands
  • Many customers might see you as a shop to visit for buying products at low prices, rather than coming to you for the range of products you offer and your quality of service
  • Can attract customers who just visit for the discount and then go elsewhere when the sale is over. These bargain hunters mostly will not form a part of your loyal customer base

 Advantages of Low Price Strategies


When a retailer plans their pricing strategies well, competitive pricing can offer many advantages:

  • It can attract more customers to your online shop
  • Offering lower prices on specific products and product categories gives you a competitive advantage
  • Customers will come back to you because they can save money on regular purchases
  • Customers trust you to offer the best prices on the products they buy, even if it is not the lowest
  • Planned discounts sales and markdowns result in more sales and can help you clear out older stock to bring in new ones
  • Customers expect seasonal discounts and special sales like Black Friday and Cyber Monday. Discounts and special offers on these days ensure a surge in sales
  • Exclusive membership offers, loyalty rewards, and discounts ensure that you retain your customer base
  • Customers who are happy with your prices spread the word through social media and through other social interactions, promoting your business

Technological aids like price optimization software and dynamic pricing can all help automate your competitive pricing. Instead of always aiming for the lowest prices on all products, you can set rules and constraints in this software. You can select the items for which there can be deep cuts in prices, you can select other items which will sell at lower prices in combination with related products, and so on. You can design seasonal discounts and special discount programs.

Plan your low price strategies well, so that customers perceive it as one of the positive aspects of shopping at your website, and not the only reason. Low prices can be a great way of attracting new customers, and encouraging them to go through your entire set of products on offer, many of which may not be on discount. When customers are satisfied with a great bargain on a product they are buying, they may not hesitate to buy other products that they see clear value in, with the money they have saved from the bargain on the first product.

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