Pricing can be a problem. Set your prices too high, and you may miss out on sales from your more budget-conscious shoppers. But if you set them too low, you might not be able to earn a worthwhile profit.
Of course, pricing can also be a powerful advantage. In the right circumstances, you may be able to raise your prices (and, therefore, your profit margin) without losing any business. Conversely, lowering your prices might lead to a significant uptick in sales volume, resulting in more profit for your store overall even if you’re making less of a profit on each individual sale.
To figure out where your prices need to be so that they’re helping your business rather than hurting it, you’ll need to experiment. Price testing — this is the process of trying out different prices for an item and then comparing the performance of each option — is the only way to discover what works best for your particular products and customers.
According to Harvard Business Review, ecommerce brands that implement price testing see an average increase of 6% in their gross profits. How many extra dollars would that translate into for your store?
Below, we’ll go over the most effective Shopify price testing strategies and techniques so that you can unlock your business’s true potential. Specifically, we’ll cover:
Before you run any tests at all, you’ll need to come up with some kind of hypothesis to start with.
Do you think raising or lowering the price of a given product would be more beneficial? And once you pick a direction to go in, how far should you try moving the price exactly?
You can answer these questions by looking around at what your competitors are doing.
It’s not like the old days when customers would need to get a clerk on the phone or even drive over to a physical brick-and-mortar store in order to see what one of your competitors is charging. There’s much less friction in the online marketplace – consumers can now find this information almost instantly with just a quick search query.
Whether you’re trying to position yourself as a high-end brand, a budget-friendly option, or something in between, you can be confident that most customers are aware of the prices that are available for similar products elsewhere. If your own prices don’t make sense in this context, you’re likely leaving a lot of money on the table.
Identify your top competitors and get a spreadsheet going for keeping track of their prices. This simple exercise can produce all kinds of potentially fruitful hypotheses, such as:
Keep in mind that your hypothesis is just a starting point — the great thing about price testing is that it often leads to unexpected places. By following actual customer behavior rather than just guessing at what your prices should be, you’ll come across ways to make your store more successful that you never would have considered otherwise.
For example, you might assume that raising prices will always lead to a lower number of sales. But in some cases, a higher price will successfully signal to customers that your products are of a higher quality, resulting in not just more profit per sale, but more sales overall as well. The results can be counterintuitive. This is why you test.
So, you’ve taken a close look at the competition and come up with a price testing hypothesis that you want to test out. What now?
The simplest way to run your price test is to just go directly into the backend of your Shopify store, change the price of the product from there, and see what happens — this is known as a pre/post test.
The main benefit of this approach is that it’s easy to implement, as it only takes a few clicks to change the price of a product in Shopify. But to actually learn anything from a pre/post test, you’ll need to understand how your product was performing in the first place. Before you adjust any prices, take note of the conversion rate, sales volume, and any other ecommerce metrics that you believe are important for the product.
This will give you a baseline to work with — after all, to determine whether any of the new prices you’re trying out deserves to be the “winner” of your test, you’ll need something to compare them to.
Once you have your baseline established, the next step is to pick a window for conducting your pre/post test. You’ll want to avoid times of the year that typically involve special sales or promotions, such as the holiday season, as this could make the results misleading (e.g., if you lower the price of a product in the weeks just before Christmas, you wouldn’t know if a spike in sales should be attributed to the new lower price or the usual holiday bump).
Another important consideration is that you need to run your test for long enough to collect a good amount of data. The more samples you collect, the more likely it is that the results of your test accurately reflect how your entire customer base will behave. If you have a decent amount of traffic, collecting about a week’s worth of data for each price you want to test should be enough.
Let’s say that competitor pricing analysis has revealed you could raise the price of a $25 product by as much as $10 and still be the most affordable option on the market, and you want to see how far you can push it without losing too much business. In that case, you could set up a test schedule like:
Then, you can look at the metrics for each week you tried out a new price, compare them to your baseline, and use this data to make a highly informed decision about where the price should ultimately be set. You could also keep testing for as long as you want, trying out everything in between your best-performing options until you hone in on the optimal price right down to the dollar.
To keep your data as clean as possible, ensure that your marketing is consistent throughout the test. Just as running your experiment during the holiday season would skew the results, so would having any limited-time deals available during one part of your test but not the others.
Also, the price should be the only thing you change on your product page during these tests. If you adjust other aspects (like marketing copy, product photos, etc.), you won’t know whether it’s the change in price or any of these other changes that is truly driving any difference in performance.
But there’s really only so much you can do to keep your data clean in a pre/post test. There’s no control in these experiments — 100% of your traffic immediately switches over from one price to the other, so even if you manage to address every other potential variable, you’re still always going to be comparing two separate periods of time.
For example, one of your competitors might happen to start running a huge sale right after you launch your test, drawing business away from your store and making the post portion of your pre/post test appear worse than it would be under normal conditions. You may then erroneously conclude that your new prices are hurting your sales, when if you had tested them at any other time you would have found that they actually would have helped.
Thankfully, there are several apps available, including Shoplift, Visually, and Intelligems, that enable you to try out different prices for a product over the same period of time. That means you can isolate price as the only variable that’s being tested, producing more meaningful results and allowing you to quickly discover which prices will generate the most revenue in the long run.
Shogun A/B Testing stands out as a particularly useful Shopify price testing app.
With Shogun, you have all the tools you need to conduct your own price tests from start to finish, and the app is quite easy to use as well. Here’s how it works:
Once your Shogun price test is live, some of your visitors will still see the original price, while others will be shown the new price. Whether a visitor sees the original price or the new one will be determined randomly in order to control for age, income, location, and all other demographic variables. And once a visitor is assigned to a price, they’ll continue to see that same price for as long as the test is running to help prevent any unnecessary confusion.
You’ll be able to review how the original version and your new variant are performing in real-time. Shogun also keeps track of statistical significance for you, so you’ll know exactly when you’ve collected enough data to declare a winner for your test.
Another benefit to Shogun A/B Testing is that, since only a portion of your visitors are being exposed to the prices you’re testing out, your brand reputation will be better protected. In a pre/post test, everyone is exposed to each price change — and some customers might get frustrated enough by all the flip-flopping to go see if one of your competitors offers a more stable experience. Shogun A/B Testing minimizes this risk.
Finally, it’s worth noting that Shopify (as well as Shogun A/B Testing) provides two ways for you to depict lowering the price of a product: you can set it up so that the original price is simply replaced by the lower one, or you can use “compare-at” pricing to show the new price next to the old price, with the old price crossed out.
People love a good deal — and that strikethrough text effect that comes with compare-at pricing makes it especially clear to customers that they’re getting a good deal. It just might be the extra push that a lot of your visitors need to go ahead and click on the buy button.
But this isn’t always the case. In fact, compare-at pricing can sometimes have the opposite effect.
Indeed, if you draw too much attention to your lower prices, customers might get suspicious about why your prices are going down. It could signal that your products have somehow become less desirable, which may then drive people away.
Generally, budget-friendly brands will benefit from compare-at pricing, while stores that sell high-end goods are often better off lowering their prices more quietly. But to really find out which option is right for your store, you’ll need to run a test and see for yourself.
