Price elasticity on Black Friday
Black Friday is a holiday which people take advantage of the low prices to buy that thing they’ve been wanting for a long time. For retailers, it a complex date because they need to make a strategy to maintain profit.
Mostly, the holiday is about price perception. So, pricing strategy should reflect the intentions of your clients and your historical data. Clients shouldn’t get the perception that they are being deceived.
An important concept to pay attention during the holiday is Price Elasticity. It captures the change in demand of a product with changes in price. An elastic product will have a great impact in demand and a inelastic won’t
Prices in Black Friday
Being able to stay profitable during Black Friday will is a great deal on an annual income. So, to sell during the holiday, you need to set the optimal price for your products.
To face the continuous price fluctuation of the market, a good strategy is dynamic pricing. The idea is to detect price changes and adapt to it. Considering the users as price trackers, you can maximize sales and profit.
During Black Friday, setting the lower optimal price will make you more attractive to clients and increase the volume of sales. But is important to ensure the profitability of each sell.
Also, to raise profitability, it’s important to project the maximum price your clients are willing to pay and the sales projection. This will make your strategy more balanced and improve your optimal prices.
That’s when a concept such as elasticity becomes more decisive.
Elasticity during Black Friday
The whole year, to make a good pricing strategy, you need to establish the elasticity to your products. But in a delicate moment it will have even more impact on your pricing.
A possibility is to give a discount on your best-selling products that have a high elasticity. That will increase the volume of sales, since the demand will increase and consequently, make a higher margin of profit.
Skipping the holiday is not an option because that will lead you to no business. But a common mistake is to give aggressive discounts, that may make the surplus in sales for the losses from the price cuts.
Have a Strategy!
Discounts such as “30% on the whole store” are not good. Although they catch the attention of customers but is an easy way to have more losses than profits on the holiday.
A good discount campaign must consider a solid pricing strategy that’s been developed throughout the year. It must consider different categories of products, other seasons, historical data, roles of customers and research.
Be aware, without a proper pricing strategy the holiday may hurt more than benefit the business.
When you understand the price elasticity involved in your products, you can apply different discounts for each category, avoiding losing money in items that won’t sell too much.
Although the price is the most important aspect of the holiday, that not the only possible action. You may experience an increase in sales by developing other possibilities.
For example, offering free samples may induce your client to a specific product that he wasn’t even considering before. Allowing exclusive products into the campaign will make the customer feel special. Finally, if you can give a different experience for you customer during the holidays, it will make the occasion more special and attract even more sales. Along with the discount strategy those other actions may be the key to be more profitable!
With Supply Brain platform, you are able to analyze your demand, simulate scenarios, identify your ideal price, and know how elasticity impacts your business. Schedule a demonstration!