What’s Your Holiday Pricing Strategy?

The holidays are just a few weeks away. Before you know it, Black Friday, Cyber Monday, and 5 weeks of intensive retail activity will be here


Black Friday is Around the Corner

The holidays are just a few weeks away. Before you know it, Black Friday, Cyber Monday, and 5 weeks of intensive retail activity will be here. Customers with over a trillion dollars to spend will walk through your store and peruse your online offering. Every retailer hopes they have the right mix of products and price to turn window shoppers into buyers. Unfortunately, hope isn’t enough. At this stage, you need the right pricing strategy to convert consumer curiosity into sales.

Here are a few different pricing strategies retailers are employing during the holiday season:

Tiered Discounts

This pricing strategy offers increased discounts as they increase their purchases. They may receive a 10% discount on the first $100 they spend, 15% off if they spend $200 or more, and 20% off on purchases of $300 or more. This strategy entices consumers to increase the items in their shopping cart, as a way to save more money.

For retailers, this strategy allows them to maintain their everyday prices. However, consumers who are looking for single items rather than doing a large shopping may turn toward other retailers for their holiday shopping.

Competitive Pricing

This is the time of year when some retailers guarantee that they have the lowest prices in town. The strategy expects to use low prices to lure consumers into the store for their holiday shopping, and the retail marketplace is full of these types of sales.

Unless retailers are using a pricing platform that automatically scans competitor’s pricing, this strategy can be difficult to implement. It also takes price out of the retailer’s control and puts it in the hands of a competing retailer. However, this can be a successful strategy for retailers with deep pockets, who are willing to cut margins in exchange for increased market share.

Loss Leader Pricing

Putting a popular item on a deep discount to draw people to your store is a tried and true pricing strategy. The expectation is that consumers, who have saved so much money on the popular item, will actually increase their overall spending on other regularly priced merchandise in the store.

This strategy can be used effectively with trending toys or popular electronics. To be successful, retailers need to invest in inventory of their loss-leader products, to protect themselves from running out of stock. An out of stock loss leader product can essentially ruin the entire promotion.

A Different Way To Think About Holiday Promotions

When retailers think about price, they usually think about it in terms of profits. However, retailers can use price strategically in a number of different ways. For example, discount prices can be used to clear out older inventory. With so many people looking to shop during the holidays, retailers can attract new customers to their store by offering promotions on new lines of merchandise, and convert them into satisfied customers who continue to shop throughout the coming year.


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