Dynamic Pricing for E-commerce Retailers on a Fixed Budget

Planning your budget in a way that will yield the highest returns can quickly turn from a task into a challenge for e-commerce retailers, especially when Amazon is the main platform you’re selling on. The reasons for this are manifold, stretching from constantly increasing FBA fees, competitors that are constantly undercutting you, ad spend, the list goes on. When your budget is facing constraints from all sides, it is all the more important that the dynamic pricing strategies for your e-commerce business are aiming to maximize sales without overspending. 

Repricing solutions were developed to do exactly this: enhance controlled growth through pricing strategies like the Push Strategy. What’s more, the Repricer was developed to apply the Push Strategy automatically to an infinite amount of products, so it doesn’t matter whether you are new to Amazon or a seasoned seller. Applying the Push Strategy will increase your ROI in both cases. 

This guide explains what the Push Strategy is, why it works so well on a set budget and how to apply it – manually and with automation. Lastly, this guide will outline why it makes sense to use a repricing solution like the SELLERLOGIC Repricer once your product portfolio starts growing and you are looking to work with discounts.

The Push Strategy – Driving Growth With a Fixed Budget

For all those thinking that creating a dynamic pricing strategy for your e-commerce businesses requires advanced knowledge in business economics or a €3000 course by a self-proclaimed Amazon expert on YouTube, we have good news. You need none of those (especially the latter – nobody needs those). All that’s required is some rational thinking on your part and some allocated time during your workday to adequately adjust your pricing to the constantly changing factors. 

What Is the Push Strategy?

The Push Strategy functions by adequately responding to consumer demand on the marketplace. You do this through controlled price drops after specific sales milestones are met. For example – when applying discounts – if a predefined number of units have been sold, a small, controlled price drop is initiated. This structured approach to discounting maintains a balance between stimulating demand and preserving profit margins, all within the constraints of a fixed budget. A nice by-product of this scenario is that the visibility of these products on the Amazon marketplace will also increase, as Amazon rewards competitive pricing. 

In another scenario, say that your company has enough visibility but needs to increase revenue, you can increase prices incrementally after a certain amount of units has been sold. If the increase in pricing is not too steep and too sudden, it will only affect your sales numbers slightly but increase your revenue significantly.  

In short: The Push Strategy works by lowering or increasing prices in small increments after hitting certain sales criteria. As I said: No Harvard economics degree needed here.

How to Apply the Push Strategy Manually for Calculated Discounting

Businesses that are starting out often have no need for Repricing solutions because of their limited product portfolio. Nonetheless, it makes sense to apply strategies like the Push Strategy as early as possible. Even if that means that you have to do it manually. In order to give you a more hands-on perspective of the matter, we have put together three examples that we have seen our clients apply successfully for their products.

Ecommerce Example 1: Dynamic Pricing for discounting as an Electronics Retailer

Scenario: You’re an electronics retailer who wants to optimize the budget while driving sales through discounts for a popular gadget.

Functionality:

– Initial Pricing: Start by setting the price at $200.

– Condition for Price Drop: Drop the price by $10 after every 100 units sold.

– Incremental Adjustment: Continue adjusting in $10 increments until reaching a minimum threshold price of $170.

Outcome: With this strategy, you ensure a gradual and structured approach to discounting, helping to maintain interest and manage inventory efficiently without significant financial strain.

Ecommerce Example 2: Dynamic Price raising for a Footwear Retailer

Scenario: A footwear retailer wants to encourage purchases of a popular sneaker by initially raising the price and then offering discounts.

Functionality:

– Initial Pricing: Start by setting the initial price at $100.

– Price Increase: Increase the price to $120 after selling 50 units.

– Condition for Discount: Offer a $10 discount once the price reaches $120, making it $110.

– Incremental Adjustment: Continue this cycle – every 50 units sold triggers a $20 increase followed by a $10 discount.

Outcome: By first increasing the price, the retailers gain more revenue for themselves and – in some cases – also create a sense of urgency and exclusivity, prompting customers to purchase before the price goes up again. The subsequent discount then acts as an additional incentive, encouraging more people to buy the sneakers while they are perceived as being on sale.

Ecommerce Example 3: Dynamic Pricing for inventory reductions as an Arts & Crafts Supplier

Scenario: Your apparel brand wants to move a seasonal clothing line before the end of the season.

Functionality:

– Starting Price: Initially price each item at $75.

– Price Drop Trigger: Reduce the price by $3 for every 30 units sold.

– Final Reduction Strategy: Proceed with these incremental reductions until the price reaches $60.

Outcome: This method ensures reductions are applied gradually and systematically, allowing your brand to stay competitive without making unnecessary drastic cuts.

By using such incremental adjustments, you will be able to create a dynamic pricing model that adapts to real-time sales data, ensuring more effective budget management and steady sales growth.

Applying the Push Strategy with Automation

The examples above make it clear that the application of this strategy is pretty straightforward. However, the whole scenario tends to change once your business starts growing, and the time and resources needed to apply this strategy to every single product becomes a strain on your budget. This is where the SELLERLOGIC Repricer comes in. Here you can take a look into the functions:

To start, you select the “Push” and set an initial price. You can also enable features like “Buy Box keep” to stay competitive. The strategy allows you to create rules that change the price based on the number of units sold. For instance, you can raise the price after selling a certain number of units, and then offer a discount once the price reaches a new higher threshold. This tactic creates urgency and encourages more purchases.

Additionally, you can schedule these adjustments to run daily, applying price rounding if needed, and set specific times for resets. This ensures prices are continuously optimized without manual intervention.

In short, your dynamic pricing and in general your e-commerce game will level-up with this automated approach: it saves time and ensures that budget allocations are used efficiently. The strategy adapts to real-time sales data, preventing premature discounts and helping to maintain profit margins. By using the Push Strategy, retailers can achieve steady sales growth and make the most of their budgets, avoiding the pitfalls of manual pricing adjustments.

Dynamic Pricing in E-Commerce: Why the Push Strategy Works so Well

Mechanism and Impact 

By triggering discounts only after meeting certain criteria, using the Push Strategy ensures that price drops are both timely and justified. Each price reduction responds directly to consumer demand, creating a form of dynamic pricing that is both reactive and proactive. This helps avoid sudden or unnecessary price changes, reducing losses while keeping sales strong. Each price drop is planned to make the biggest impact, driving growth without random discounts.

Steady Growth without Overspending

The timed and data-driven nature of the Push Strategy significantly boosts sales without causing premature or excessive discounts. By linking price reductions to specific sales milestones, such as selling a certain number of units before dropping the price, this strategy ensures that every discount is both timely and justified. This measured approach prevents abrupt price changes that could unnecessarily erode profit margins.

For instance, let’s take another look at example one above, where the gadget is priced at $200 and only reduces the price by $10 after every 100 units sold. With this technique, you can avoid making hasty discounts that are not backed by sales data. This incremental reduction, driven by actual sales performance, stimulates demand while preserving the product’s perceived value. Customers respond positively to these controlled discounts, which appear as a reward for buying in greater numbers.

The SELLERLOGIC Push Strategy uses sales data to avoid unnecessary discounts. Instead of cutting prices impulsively, it makes sure each discount is effective and profitable. These timed, data-driven changes help the budget last longer and keep sales strong, ensuring steady growth.

Flexibility and Customization for Sales Performance

Larger companies and agencies can use the Push Strategy by adjusting discount steps based on how well each product sells. For example, if a product is selling well, your company might decide to reduce the price by smaller increments after selling more units. For slower-moving items, you can drop the price more frequently and by larger amounts to boost sales.

This flexibility makes sure the budget is used efficiently. By changing discount steps and timing based on real-time sales data, your company can avoid unnecessary price cuts across all products. This means discounts are applied where they will make the most impact, preserving profit margins. 

Let’s take a closer look at example three this time, an apparel brand might lower prices by $3 for every 30 units sold for one item, but by $5 for every 50 units sold for another, based on each product’s performance.

Instead of blowing through your budget with uncontrolled discounts, companies can stretch it over a longer period. While this approach is undoubtedly useful for any company, retailers with many different products and varying demand benefit immensely from this. By making controlled, data-driven price changes, you can ensure that the resources you spend on discounts contribute to steady growth and profitability, instead of hoping for the best.

Conclusion: The Strategic Edge for Large Retailers and Agencies

Embracing the Push Strategy is a step toward sustainable, data-driven growth for successful dynamic pricing in e-commerce. While businesses of every size profit from this strategy, it makes sense for growing businesses to automate the process with dynamic pricing e-commerce software in order to save time and money. 

SELLERLOGIC’s Push Strategy offers a strategic and controlled approach to discounting that respects budget constraints and ensures effective sales growth. By dynamically adjusting prices based on real-time sales data, it prevents premature and excessive discounts that could hurt profit margins. This makes it an ideal solution for large retailers and agencies seeking reliable, steady sales growth without compromising their financial health.

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