Tactical & Practical A Deep Dive On Price Testing
May 23, 2025
Discover the secrets of price testing and its vital role in boosting e-commerce revenue. Learn how to adapt pricing strategies to achieve the elusive price market fit and capitalize on seasonal trends. The discussion highlights real-world success stories, showing how smart pricing and customer segmentation can lead to remarkable profit growth. Plus, uncover a structured methodology that guides businesses through effective split testing to optimize their websites and customer journeys!
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Flawed Margin-Based Pricing
- Optimizing price by target gross margin overlooks consumer behavior variation at different price points.
- Different prices impact order volume in unpredictable ways, so testing is essential to find the best price.
Start Price Testing Wide
- Start price testing by comparing your baseline with 20% higher and 10% lower prices to get directional data.
- Use wider price gaps initially and narrow the range with further phases for fine-tuning.
Use Profit Per Session Metric
- Measure test results using profit per site session, considering margins, conversion rate, and average order value.
- This metric balances price impact and volume for optimal profitability.