Group pricing is one of the most common methods for significantly increasing sales. It enables eCommerce retailers to establish varying pricing for items based on their quantity and the client group. In this article, we’ll learn why should retailers use group pricing is a successful feature and how to implement it in their online business.
What is group pricing?
A price group refers to a collection of prices applied to a specific group of clients. Simply put, it’s a technique to provide unique pricing different from the standard price. Businesses achieve this by grouping a number of consumers into one category and determining the pricing for that group.
When dealing with different types of clients, businesses frequently utilize group pricing. As a result, when consumers log into their eCommerce account, they will see specific discounts based on the sort of client they are.
On a larger scale, firms must determine who is eligible for discounts and what discounts are available. Wholesalers, for example, may offer lower pricing than retailers because they purchase in bigger quantities. Alternatively, loyal customers’ prices should be lowered more frequently than regular ones. Businesses can simply modify pricing methods depending on membership in a group by using price groups.
Benefits of group pricing
Now that you know what group pricing is, what benefits can it bring retailers? Here are the most 3 prominent ones:
Build targeted marketing strategies
Group pricing provides a fantastic opportunity to create targeted marketing campaigns that cater to specific audiences. Its inherent beauty lies in the simplicity and cost-effectiveness it brings to promoting and pricing your products and/or services. By directing all marketing efforts toward a particular focus, you can optimize your marketing budget’s return on investment (ROI).
Group pricing strategies also enhance the customer experience by automatically offering hassle-free discounted rates. For example, rewards program members might enjoy exclusive price reductions simply by logging into their accounts—a seamless process that encourages customer loyalty and repeat business.
According to a survey by Hawk Incentives, about 97% of consumers actively look for deals when shopping, with 92% indicating that rebates can sway their decision to purchase. These statistics underline the importance of incorporating tailored group pricing strategies into your business model.
Furthermore, adopting a technological approach by integrating these discounts into the system streamlines order processing for admins. They no longer need to manually apply special prices or promotions, which reduces human error and the time spent on administrative tasks.
Reward wholesale customers
The prices used for a mass transaction of products are known as wholesale pricing. For example, when someone buys 100 pairs of shoes rather than one or two pairs, they buy wholesale. The fundamental aspect of wholesale pricing is that they are cheaper than retail prices due to bulk discounts.
To reward this type of customer, group pricing is a useful technique. You can set a price level for wholesalers and apply it to each case. This makes the whole process happen smoother and more systematically, thus minimizing errors (especially for large businesses).
Run efficient loyalty programs
Group pricing can also help retailers reward customers more efficiently, in order to build trust and enhance the brand’s reputation. As a retailer, you can assign a special discounted price for all the clients who shop frequently at your store – as a type of appreciation for their trust in the brand. Having group pricing functions in your system or plan can make this loyalty program more cost- and time-efficient. Moreover, this can also encourage customers to upgrade their membership card, for example, to receive better discounts. This way, group pricing can benefit retailers and customers, which is a clear win-win.
Group pricing is a powerful strategy that can significantly benefit retailers and customers. By implementing this approach, retailers can cultivate trust with their patrons, enhancing the brand’s reputation and fostering customer loyalty. For instance, retail businesses can designate a special discounted price for those who frequently shop at their store as a token of appreciation for their continued trust and support.
Integrating group pricing functions into a retailer’s system can make the execution of loyalty programs much more cost and time-efficient. This streamlined process encourages customers to take full advantage of these loyalty programs by upgrading their membership cards to access even better discounts. For example, a bronze-level member, who receives a 5% discount, may be incentivized to upgrade to a silver-level membership for a potential 10% discount.
Group pricing has proven to be an effective customer retention tool. In a recent survey by Forbes, approximately 62% of respondents indicated that they would be more inclined to continue patronizing a retailer that offers a loyalty program. With regular customers reportedly spending 67% more than new ones, group pricing can yield substantial, long-term financial benefits for a business.
When to use group pricing?
You might be wondering what specific customer groups retailers can use group pricing for. Here are some examples:
As mentioned before, wholesale pricing is the price you charge retailers who buy in big quantities. In general, the success of your business depends on finding the proper pricing strategy and prices for your items. Pricing influences both the volume and profitability of your sales. Therefore, setting the wholesale price too low risks damaging the product’s perceived worth. Worse, you may not be able to pay your costs and, as a result, risk losing money in your business. If you set your wholesale pricing too high, your items will not be appealing enough for wholesalers to buy them in large quantities.
To support businesses in this tricky process, the group pricing function, often available on eCommerce platforms or point-of-sale systems such as ConnectPOS, is a valuable tool. It can help execute the plan for retailers after they have considered and made decisions regarding all the above-mentioned points.
Students are another group of customers that businesses often pay special attention to. By providing a student discount, even if it is minor, businesses can form a community around their brand that aspires to loyalty. Of course, this price group strategy is more useful and recommended if you own a business that offers student-friendly products. Research has shown that over 97% of students who received a discount for a particular firm said they would try their products out.
For these reasons, if you plan to use group pricing, it can be wise to offer student discounts. Several international businesses, such as Spotify and Apple, provide student discounts, which have helped them expand their company with an audience that is already overloaded with choices.
For loyal customers
Loyal customers should be rewarded with discounts, which helps them feel valued. It’s a fantastic tool for retaining customers. For example, your eCommerce store is building a loyalty program where customers with different membership cards can receive different pricing levels. In this situation, the group pricing function ensures the price can be reduced automatically, and customers can immediately see the promotional price for their membership.
For online shoppers
For businesses with both online and offline platforms, having discounts for only online shoppers is now becoming a common way to encourage customers to purchase on their eCommerce sites. In this case, price group is often included in a point-of-sale system, where many other business operations, such as payment processing and inventory management, take place. This can be beneficial in the way that it can be combined with other eCommerce features. As a result, you can track sales and price groups at the same time.
If you want a point-of-sale system like this, don’t hesitate to check out ConnectPOS. You can customize which group of customers you want to implement, such as wholesalers, students, loyal customers, and even VIPs or staff.
After all, we hope that you can have a better understanding of group pricing after reading this blog. Do you still have questions about group pricing or our point-of-sale solutions? Talk with our team for more information!