Choosing a pricing strategy serves a baseline for products that often have pricing tiers and other specialty prices in B2B sales. Pricing is critical in business-to-business sales because profit margins can be extraordinarily thin when products are sold at wholesale prices. Companies that supply dropshippers also face the problem of charging a price that allows them to make a profit. Even B2C retail sales are affected by the pricing approach. If companies charge too much, the products won’t sell. If products are underpriced, a company loses profit.
Price Planning Best Practices
Pricing science has its roots in the deregulation of the airline industry in the 1970s.  That’s when the airlines began using flexible pricing based on demand. The basics of scientific pricing can be summarized as the use of statistical models, competitor analyses, costs and consumer demand to create a comprehensive pricing strategy.
Basically, companies must find the “sweet spot” between supply and demand. The most important considerations include the three Cs:
- Cost: All the costs of a product and prorated portions of overhead
- Competition: What competitors charge for similar products
- Customers: What the targeted customer demographic is willing to pay
The best strategies for pricing include adopting demographic-based pricing and updating prices based on market demand, the availability of raw materials, brand perception and other factors such as company goals.
Companies need solid demographic data to target the right customers. This information includes:
- Gender, age and ethnic affiliation
- Income information
- Educational level
- Buying and browsing data if available
The Bass Diffusion Model, which was developed by Frank Bass, divides consumers into two groups: innovators and imitators.  The group of innovators is more likely to buy a new product and recommend it to others. Imitators adopt a product after other people begin using it.
Other Best Practices for Setting Prices in the Sweet Spot
Companies need to consider the target audience, the product and other factors that include:
- Does the product create a new market, and if so, is a market-penetration strategy workable?
- What benefits does the product have over similar products?
- What products do targeted customers regularly use?
- Who are the company’s competitors?
- Is the market for the product established or growing?
- Are there risks in using the product or service?
Knowing the answers to these questions can guide companies to the best pricing strategy.
There are many strategies to price e-commerce products. Each strategy comes with special considerations that – if managed – make the strategy work more successfully. Some of the top strategies include: 
- Prices Based on Value
Value is not the same as cost. Many business owners focus solely on their costs, but value makes a better standard for pricing because it considers the demand for the product. The important issue is to make sure that the value has a basis in real-world demand.
- Prices Based on Costs
The cost of materials and manufacturing are commonly used to set prices, but many companies fail to consider associated expenses such as marketing and the costs of overhead.
- Prices Based on Marketing Trends
Trends affect prices, and these can change throughout the marketing period. Economic and product trends are both important factors. New technologies can make existing products somewhat obsolete, but they can also make certain products more desirable. As the desire for new and expensive technology wanes, older products can regain their desirability.
- Prices Based on Perception
This is one of the most difficult pricing approaches because companies must guess whether a given product will be well-regarded. It’s important to create compelling content to promote the benefits of high-end products to raise customer perception. On the other end of the spectrum, low prices affect customer perception. Many people believe that they get the quality that they pay for when shopping.
- Prices Based on Demand
It’s important to raise or lower prices based on market demand. When a company can offer high value or identify high demand, that’s a good time to raise prices or vice versa
- Prices Based on Market-penetration Strategies
Companies often need to attract customers to their brand. Pricing key products at discounts based on their value can attract customers to the brand where other products offer higher profit margins.
- Prices Based on Product Differentiation
Prices based on improved quality and special features can work if a company can make a strong case to differentiate the product from similar products offered by competitors. In fact, it’s often important to differentiate products just to compete with an established brand at a similar price.
- Prices Based on Experimentation
Sometimes, the best strategy is experimentation to see what works in real-world scenarios. Companies can test-market their products, conduct consumer surveys, solicit social media influencers with free samples and use other strategies to test the waters.
- Prices Based on Competitor Prices
Competition-based prices focus on competitor prices and not on costs or consumer demand. Companies can use an aggregate average to match or slightly undercut prices.
- Dynamic Pricing
Dynamic pricing is a flexible strategy that works especially well with wholesale buyers, hotels and airlines. Also known as surge pricing and demand pricing, dynamic pricing is time-sensitive. B2B buyers and travelers often capitalize on conditions such as a company wanting to move inventory or a hotel wanting to fill rooms on a given day.
- Incentive-Based Pricing
Many companies offer discounts and incentives to move languishing inventories of certain products.
- Prices Based on Skimming
Some companies price new items high with extreme profit margins to milk the market for profit – usually for technology items with short shelf lives such as new phones. After sales begin to slide, companies lower the price to target bargain hunters.
Pricing elasticity is another important factor in pricing. Some products get purchased despite price increases. These include items such as cigarettes, vaping supplies, gasoline, batteries, heating fuel, food products, etc. Optional goods, such as electronics, cooking supplies and household decor, are considered elastic and more vulnerable to slow sales if the prices increase.
If consumers still buy a product after a price increase, companies can consider the product inelastic – under current market conditions. 
Dealing with multiple products, multiple sales channels and marketing incentives can make manual pricing almost impossible to manage. That’s why pricing software, price monitoring tools and automatic calculators can be important resources for e-commerce.
Test and Fine-tune Regularly
It’s simply not enough to set up a pricing template and leave matters alone. Some strategies that look good on paper don’t work as well as expected in generating real-world sales. Market trends change constantly, and a good plan might stop working. That’s why companies should regularly monitor and fine-tune their pricing strategies.
Most companies produce a range of goods, and some products might use one strategy while another group of products sells better or earns more profit using another pricing approach. Hybrid strategies can even be used for the same product sold in different sales channels.
Pricing strategies help companies maximize profit and revenue for each product or service. It’s not possible to price products in a vacuum; decision-makers must consider the company’s revenue goals, marketing plans, core concept, business associates, sales channels and competitor pricing to develop a comprehensive pricing approach.
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References: Ecwid.com: How to Price Your Products? A Science Backed Answer
https://www.ecwid.com/blog/how-to-price-your-products.html  Americanexpress.com: Get It Right: Pricing Strategies That Work
https://www.marketingdonut.co.uk/market-research/benchmarking/choose-a-pricing-strategy  Blog.hubspot.com: The Ultimate Guide to Pricing Strategies