The online footwear industry is thriving due to changing shopping behaviors and the ease of e-commerce.
Selling shoes online is highly profitable, and the industry is poised for growth. As with any business endeavor, pricing is a fundamental factor to consider, as a price that is too high may disengage customers while a too low charge will cut into profits.
Finding the sweet spot is essential for capitalizing profitability.
This blog covers researched methods you can use to put the right price on shoes made available online.
From analyzing market trends, understanding varied pricing mechanisms and cost structures, we help you formulate a price that brings more customers while making the markup substantial enough to guarantee robust profits.
Important Shoe Pricing Strategies
To begin pricing shoes for sale, there first needs to be put in place a fool proof method of calculating expenses.
For production, this would encompass the cost of materials, labor, manufacturing, and additional shipping fees, as well as platform expenses from Amazon, Shopify, or even marketing.
For example, if a pair of shoes cost a total of $50, they cannot be sold for below this figure if profit is intended to be made.
Besides costs, one must always take customer expectations and market trends into consideration.
Studies reveal that customers frequently check prices on a number of websites before settling on one. So, while setting your prices, they must correlate with the value of your product and your competitors.
Products such as Amazon’s Product Opportunity Explorer can analyze the demand in the market and the price of the competitors’ products, making it easier to set a profitable price.
Moreover, seasonal changes affect pricing decisions. For instance, the demand for athletic shoes may increase during back-to-school seasons as well as during fitness-focused months such as January.
If you sharpen your price with these trends, you will be able to maximize peak sales periods while being reasonably priced.
Effective Pricing Strategies
#1. Cost-Plus Pricing
Cost-plus pricing is when a set percent of profit is added on to all costs by a business. For example, if the production cost is $50 and a profit margin of 50% is aimed at, the selling price will be $75.
This serves as an easy method of obtaining profitability, but unlike other methods of pricing, cost-plus pricing can lead to budgetary issues due to the constant change of costs such as materials or shipping.
Cost-plus pricing may be simple, but it can be unhelpful in a competitive environment where customer satisfaction does not relate to your price. Try using this pricing strategy in conjunction with other methods, such as value-based pricing or competitive pricing.
#2. Competitive Pricing
A competitive pricing strategy involves injecting a price at or around an industry average while considering the pricing of competitive companies.
Such competitive pricing works in oversaturated markets where customers are brand sensitive and willing to switch brands for savings.
As an example, if the price range for sneakers on other platforms is $60-$70, setting your price within this range will help capture financially prudent buyers.
Despite all its advantages, competitive pricing has its downsides. It can lead to a ‘race to the bottom’ phenomenon, where businesses make unsustainable profits through constant price cuts.
To combat this, consider striking a balance by emphasizing other selling points like better quality or other high-priced justify, such as eco-friendly materials.
#3. Value-Based Pricing
Prices that are value-based are prices targeting a perceived segment. In this case, the prices of these other products with higher sentiment, such as a branded pair of shoes or vegan shoes.
A marketing campaign for these products will feature lower price elasticity as standard or special marketing features so they get easily sold, which also helps strengthen brand loyalty.
Analyzing Market Trends and Customer Behavior
The global footwear industry is analytically divided into athletic shoes, casual footwear, and formal wear, which have distinct demand patterns.
Each of these categories has unique market trends, and understanding them is important in setting reasonable prices for sneakers/ athletic shoes.
For instance, the industry has seen a drastic increase in demand for sneakers owing to the increased focus of the population towards health and fitness making it a highly profitable category for consumers online.
The knowledge and behavior of consumers must also be analyzed when making such decisions because they only add value to the discussion regarding pricing.
People in the modern day are more aware than ever and are usually willing to pay more as long as products are manufactured sustainably and ethically.
You can substantially increase the appeal of your brand while still charging premium prices to conscious shoppers by incorporating these elements.
In addition, tools like social media analytics and Google Trends are emerging as important tools to analyze the preferences of a target demographic which would provide insight for branding.
If you position yourself to provide what they are inclined towards, there is a potential to optimize profitability while positioning yourself as a market leader.
Optimizing Price Points for Profitability
Determining the optimal price points for products will require significant amounts of trial and error.
A good starting point would be to set different price ranges for a product on different sales platforms or during sales and promotional campaigns.
By assessing sales records, you will be able to find out which price points allow for the highest revenue while maintaining healthy profits.
Another strategy that works remarkably well is tiered pricing. One study suggests selling basic sneakers for $50 and then charging $100 or more for the limited-edition designs.
This strategy helps in generating more revenue as well as improving brand perception through versatility.
Offering complimentary products like shoe care kits or insoles can also help in improving profitability. More sales are encouraged when customers are offered these items at a bundled discount.
Promotional Efforts to Complement Pricing
Strong but thoughtful promotions ensure sales with minimal impact on profit margins. Offseason limited discounts help with inventory clearance while also generating purchase urgency.
Increasing spending per transaction is also possible through bundling. For instance, “buy a pair of shoes and get 50% off the second one” is a great example.
Another powerful strategy to ensure customers keep coming back is through loyalty programs, which reward customers for repeat purchases.
Enhancing brand loyalty is possible by providing customers with exclusive discounts or early access to new collections.
Tracking and Changing Prices Over Time
In contrast to popular belief, pricing is never absolute. As with most things, it needs continuous evaluation based on a variety of market conditions.
Make sure to regularly keep an eye on measures like profit margin, customer feedback, conversion rate, and competitors to always know what needs attention.
Demand for specific types of footwear often changes seasonally. For instance, prices can be raised during peak holiday seasons without losing buyers who overspend during this time, making it easy to maximize profits.
That’s one of the reasons why seasonal adjustments are so important in the footwear industry.
In addition, always keep an eye on the raw material price fluctuations or any changes in consumer behavior to adapt quickly.
These changes can significantly affect the market, and if they are not addressed, your pricing strategy may become irrelevant and unprofitable.
Conclusion
Selling shoes for the most profit possible with an online store requires a combination of great strategy and effective tactics.
The cost structures, employing great pricing policies, monitoring market shifts, and keeping an eye on the performance measures give the opportunity to win the competition in the industry.
Take the time to implement various methods and improve them in the direction of actual data to determine the most effective approach to your business model.