Tag Archives: business

Pricing and margins

One of the many things I’ve noticed about having worked with E-commerce businesses is that it’s important to understand the effects of pricing on margins.

Pricing is a complicated business that switches from a strategic to tactical decisions on a regular basis. Price too high in relation to your competition and you could price yourself out of the market. Price too low and you could drive yourself out of business as you struggle to make up your profits on volume.

At the same time, deciding to run loss-leaders and sales is a very tactical decision that can have long-term strategic effects. If you have a large sale every month, you can drive your customers to ‘buy the sale’. At the same time, not selling your excess inventory can cause cash-flow problems.

Learning how to balance this often requires both experience in the industry as well as an understanding of your overall strategy. Sometimes all that you need is an understanding ear.