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Smart Pricing Strategies for Generating Higher Conversions (Part 2 of 2)

by Rohan Ayyar  |  
June 9, 2015
  |  2,973 views

Part 1 of this two-part article covered four pricing strategies. Part 2 discusses three others.

5. One Price Fits All

In a world that is racing toward personalization with the help of Big Data, there's still a certain charm in fixed-price sales.

During the Great Recession, when nearly all other retailers in the country were struggling to stay afloat and make ends meet, dollar stores surged thanks to their low prices and extremely simple pricing policies. Dollar General was a success story in discount-retail category with a healthy balance sheet throughout the recession in the past decade and its sales going up 10.5% to reach $4.4 billion in Q3 of 2013.

This success of dollar stores elicits a fundamental question: How does a company that claims to sell every item in the store for a dollar or less make more profits than regular retailers that charge full price?


The trick lies in unit sizes. Instead of offering five pounds of Product A for $5, they offer a one pound package of Product A for $1, leaving the impression of huge savings. Similarly, if a big box retailer sells a two pound pack of Product B for $4, a dollar store might offer a bundle containing four packs of the same Product B, with each pack weighing half a pound and costing $1 pound per pack.

As Justin Johnson from Cornell University puts it, dollar stores have achieved the mythical feat of bringing down retail Goliaths by focusing on the right competitive advantage instead of trying to offer the lowest prices in the market.

Consider offering a uniform price for all items as a one-off sale event. Maximize revenue and minimize price perceptions in consumers' minds by using creative packaging and pricing combinations.


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Rohan Ayyar is a project manager at E2M solutions, a digital marketing firm.

LinkedIn: Rohan Ayyar

Twitter: @searchrook

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