Understanding Omnichannel Pricing

In today’s economic climate, companies must leverage new strategies to insulate their margins from volatility. One of the top options is omnichannel pricing. Defined as “the ability to execute pricing across any commerce channel with a set pre-defined of rules,” omnichannel pricing helps businesses to maximize profit margins on every sale, regardless of the channel, while also providing a seamless experience for customers.

This has become crucial because shopping is no longer confined to a single channel, and customers expect a consistent experience across all touchpoints. Studies have shown that customers research before buying and value knowing they are getting a good deal, often using their smartphones for in-store research.

Types of Omnichannel Pricing

To help companies understand how omnichannel pricing can help them, the experts at Flintfox spelled out the three main types:

• Uniform omnichannel pricing: This strategy involves offering consistent pricing across all channels, including online and offline, and applying sales across all channels. The advantage is that it builds trust and confidence with customers due to transparent pricing. However, retailers might miss out on potential profits from customers willing to pay more.
• Channel-specific omnichannel pricing: This approach involves setting different prices for products depending on the channel. This is often used to account for differences in operating costs. For instance, a product might be priced higher in a physical store than online, or vice versa. This strategy allows retailers to increase profit margins by charging less price-sensitive customers more, but it needs careful management to avoid customer backlash
• Combination pricing: Also known as hybrid pricing, this strategy involves unified omnichannel pricing with exceptions. It offers different pricing options for different combinations of products or services, such as discounts for buying multiple items or package deals. Personalized, loyalty-based offers are also part of this strategy to encourage specific customer purchases and increase overall sales. Supermarket loyalty programs that offer tiered discounts and perks based on spending, applicable both in-store and online, are an example of combination pricing.

Implementing an Effective Omnichannel Pricing Strategy

While understanding these types of pricing is important, implementing them properly is just as important. Flintfox also highlighted some important tips for how companies can build their own omnichannel strategies.

Understand channel nuances: When creating an omnichannel pricing strategy, businesses must consider the different pricing dynamics of each channel. For example, online channels may be more price-sensitive, while in-store channels may focus more on the overall customer experience.

Use a data-driven approach: Businesses must analyze customer data from each channel to understand pricing trends and customer behavior. Businesses can then use this data to create pricing rules, and algorithms to apply across all channels. For example, companies may use dynamic pricing algorithms that adjust prices in real-time based on customer demand and competitor pricing.

Take a holistic view: Another key element of an omnichannel strategy is ensuring all channels are integrated and work together seamlessly. This way, customers can quickly move between channels without experiencing inconsistencies or disruptions.

What This Means for SAPinsiders

Combine people and technology. Businesses must have the right technology and infrastructure to support their omnichannel strategy. They need to understand things like customer groups, competitive pricing, channel characteristics, pricing trends, and pricing deployment. This may mean investing in advanced pricing technology, customer data analytics tools, and omnichannel inventory management systems.

Unleash your data. Businesses need accurate data to react quickly to market signals, competitor activity, and new opportunities, and to vary pricing based on various factors. Companies must work to break down silos that prevent this from happening.

Planning is paramount. Companies looking to implement omnichannel pricing must take a holistic approach before implementing any new operating procedures. Understanding challenges and opportunities ahead of time leads to more streamlined operations down the road.