Why Pricing Strategy Matters More Than You Think

Your price directly affects:

• Conversion rate

• Profit margins

• Ad scalability

• Brand perception

• Repeat purchase behavior

Too high → low conversions.
Too low → no profit.
Too many discounts → brand damage.

You need balance.

Step 1: Understand Your Break-Even Price

Before discounts, before offers — calculate break-even.

Break-Even Formula (Simple Version)

Break-even price =

Product cost + Packaging + Shipping + Payment fees + Ad cost per order + Returns buffer

Step 2: Add Target Profit Margin

After break-even, decide:

How much profit per order do you want?

Healthy ecommerce margin range (varies by category):

• 30%–60% gross margin preferred

• Higher for beauty & accessories

• Lower for electronics

If break-even is ₹670 and you want ₹200 profit:

Minimum price = ₹870+

That’s strategy — not guessing.

Step 3: Psychological Pricing in India

Price perception matters.

Indian consumers respond strongly to psychological pricing.

Common Effective Formats:

1. ₹999 instead of ₹1,000
2. ₹499 instead of ₹500
3. ₹1,299 instead of ₹1,350
4. ₹2,499 instead of ₹2,500

The “9” effect works because it feels lower.

But use carefully.

Premium brands may use round pricing to signal quality.

Step 4: Avoid Constant Discounting

Many D2C brands damage margins by:

• Running 30–50% off frequently

• Training customers to wait for sales

• Reducing perceived value

Instead of heavy discounting, try:

1. Bundle offers
2. Free shipping threshold
3. Limited-time add-ons
4. Loyalty rewards

Discount strategically — not emotionally.

Step 5: Smart Bundling Strategy

Bundling increases:

• Average Order Value (AOV)

• Perceived value

• Profit per shipment

Step 6: Value-Based Pricing (Not Cost-Based)

Cost-based pricing says:
“What did it cost me?”

Value-based pricing asks:
“What is it worth to the customer?”

Example:

If your product solves a painful problem:
You can charge premium.

Example categories that support value pricing:

• Skincare solutions

• Fitness programs

• Personalized products

• Premium home décor

• Organic or specialty goods

Price according to benefit, not just cost.

Step 7: Dynamic Pricing During Festivals

Indian ecommerce has strong seasonality:

• Diwali

• Navratri

• Eid

• Wedding season

• End-of-season sales

Instead of flat discounts year-round:

Increase urgency during high-demand periods.

Step 8: Free Shipping Threshold Strategy

Instead of lowering price:

Set free shipping above a certain value.

Example:

Shipping cost = ₹70
Offer free shipping above ₹999

Customer adds more items.
AOV increases.
Perceived savings increase.

This is profit optimization, not discounting.

Step 9: Tiered Pricing for Different Segments

Not all customers are the same.

You can create:

1. Entry product (low price)

2. Mid-tier product (most popular)
3. Premium option (high margin)

Step 10: Track Pricing Metrics

Pricing is not “set and forget.”

Monitor:

• Conversion rate by price change

• AOV

• Gross margin

• Refund rate

• Repeat purchase rate

• CAC vs price

Small price changes can significantly affect profitability.

The Ideal Pricing Formula for D2C in India

1. Calculate true break-even
2. Add target profit margin
3. Use psychological pricing strategically
4. Bundle instead of discounting
5. Set free shipping threshold
6. Monitor performance monthly

Profit optimization is a system — not luck.

https://bechna.app/#features