{"id":10485,"date":"2021-05-05T10:00:59","date_gmt":"2021-05-05T06:00:59","guid":{"rendered":"https:\/\/www.cs-cart.com\/blog\/?p=10485"},"modified":"2025-07-24T12:01:43","modified_gmt":"2025-07-24T08:01:43","slug":"fresh-practices-on-how-to-set-pricing-in-a-virtual-multi-store-marketplace-part-ii","status":"publish","type":"post","link":"https:\/\/www.cs-cart.com\/blog\/fresh-practices-on-how-to-set-pricing-in-a-virtual-multi-store-marketplace-part-ii\/","title":{"rendered":"Fresh Practices on How to Set Pricing in a Virtual Multi-Store Marketplace. Part II"},"content":{"rendered":"\n

As the Deloitte revenue and costs’ profit tree<\/a> shows, pricing is an important component of the online marketplace profit-building process:<\/p>\n\n\n\n

\"multi-vendor<\/figure>\n\n\n\n

It is one of the main deciding factors for online shoppers: 86% say<\/a> it is important to be able to compare prices from different sellers.<\/p>\n\n\n\n

Besides, pricing influences the expenses that you can cover.<\/p>\n\n\n\n

One of the main pricing difficulties is keeping prices updated for a large number of items that\u00a0online marketplace<\/a>\u00a0trading centers usually have. Amazon and some other online shopping mall platforms<\/a> have implemented automatic pricing systems and can change prices several times a day. Many platforms, including Amazon, use automated tools not just to adjust pricing, but also to maintain a consistent price match<\/a> against competitors.<\/p>\n\n\n\n

However, there is no single approach that works for all virtual multi-store marketplace platforms<\/a>.<\/p>\n\n\n\n

A very deep understanding of your ecommerce marketplace product value, customers’ demand, and the competitors’ pricing methods<\/a> is a must to choose the pricing strategy that would be helpful in increasing your listings’ revenue performance.<\/strong><\/p>\n\n\n\n

You may also be interested:<\/strong><\/p>\n\n\n\n

multi vendor transaction fee for marketplace platform<\/a><\/p>\n\n\n\n

online marketplace center promotion<\/a><\/p>\n\n\n\n

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<\/span>1. Pricing Strategies and Tactics<\/span><\/h2>\n\n\n\n

Pricing strategies help to determine the relevant pricing point for your clients, at which you maximize your profits.<\/strong><\/p>\n\n\n\n

The strategies are built around your costs and the value you provide, your customers’ demand, and the pricing approach that is relevant to your market.<\/p>\n\n\n\n

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1.1 Cost-Based Strategy<\/h3>\n\n\n\n

This method is based on the total costs you have and the profit amount you expect.<\/p>\n\n\n\n

Total costs include two types of costs:<\/p>\n\n\n\n

\u25cf fixed costs are the regular expenses that you have regardless of how much you sell: rent or salaries;
\u25cf variable costs are increasing together with your sales growth: extra labor, promotion, shipping, packaging.<\/p>\n\n\n\n

To avoid loss, your price must be higher than the variable expenses, while each sale makes a contribution towards covering your fixed costs.<\/p>\n\n\n\n

When you’re picking a per-item price, define a profit margin amount you expect and use this cost-based pricing formula:<\/p>\n\n\n\n

Unit Cost = Variable Cost per Unit + Fixed Costs \/ Total Units to Be Sold<\/p>\n\n\n\n

Also, there is the cost-based pricing online calculator.<\/p>\n\n\n\n

This strategy allows the setting of prices without in-depth customer or market research, ensures a minimum return on each product sold and helps to track costs growing.<\/p>\n\n\n\n

However, it doesn’t show if your clients are willing to pay more for the product and doesn’t take into account the demand changes.<\/p>\n\n\n\n

It fits the multi-vendor marketplace<\/a> centers with the large product volumes.<\/p>\n\n\n\n

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1.2 Value-Based Pricing<\/h3>\n\n\n\n

This strategy is based on the real benefits and perceived value that your customers have in connection to your online marketplace trading cen<\/strong>ter.<\/p>\n\n\n\n

It is hard to implement since it requires a deep understanding of your clients, and the valuation of your features and services by different segments of consumers.<\/p>\n\n\n\n

However, it helps to set the highest possible price.<\/p>\n\n\n\n

There is no single formula to calculate pricing with this strategy, but the set of steps:<\/p>\n\n\n\n

1. Implement product preference analysis to define the customer value definition.<\/strong><\/p>\n\n\n\n

2. Use price sensitivity analysis<\/strong>: the real price points that customers are willing to pay and the part that the price plays in their purchase decision.<\/p>\n\n\n\n

3. Focus on a single segment<\/strong> or determine a separate value-based price for each segment you work with.<\/p>\n\n\n\n

4. Define the unique feature of your online shopping mall platform that adds value to the customers<\/strong> and estimate its dollar value through qualitative customer interviewing or survey.<\/p>\n\n\n\n

That value can be: convenience, the speed of delivery, or the wide sellers’ choice.<\/p>\n\n\n\n

Amazon is one of the ecommerce marketplace solutions that use this pricing strategy.<\/p>\n\n\n\n

As the research shows<\/a>, one of the main multi-vendor marketplace center priorities is fast delivery.<\/p>\n\n\n\n

The online shopping mall platform defined the value for the certain segment customers, things for babies: delivery time.<\/p>\n\n\n\n

Delivery time <\/em>dramatically affects<\/em><\/a> the segment customers’ willingness to pay:<\/em><\/p>\n\n\n\n

\"online<\/figure>\n\n\n\n
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1.3 Dynamic Pricing<\/h3>\n\n\n\n

Incomplete data on the customers’ demand and its peaks is the main issue of online marketplace trading centers when setting pricing.<\/p>\n\n\n\n

Dynamic pricing method is based on algorithms and helps to keep your pricing up-to-date towards customers’ demand and competitors’ prices.<\/strong><\/p>\n\n\n\n

Unlike static pricing, which is constant over several hour periods, dynamic pricing changes in response to certain criteria: demand, competition, seasonality.<\/p>\n\n\n\n

The Berkeley University research<\/a> shows the method advantage:<\/p>\n\n\n\n

Robustness<\/em><\/a> of the pricing strategies to the demand changes, static pricing<\/strong>:<\/em><\/p>\n\n\n\n

\"online<\/figure>\n\n\n\n

Robustness<\/a> of the pricing strategies to the demand changes,<\/em> dynamic pricing:<\/em><\/p>\n\n\n\n

\"virtual<\/figure>\n\n\n\n

Uber is using dynamic pricing to capture “demand surge”<\/a>, while Lyft is utilizing<\/a> it to define the “prime time” when its service is in demand the most.<\/p>\n\n\n\n

Airbnb is using this method to help hosts by tracking peers’ pricing through its Smart Pricing<\/a> tool:<\/p>\n\n\n\n

\"ecommerce<\/figure>\n\n\n\n

Besides tracking the hosts’ prices, the tool shows:<\/p>\n\n\n\n

\u25cf the frequency that competitors’ listings get booked at;
\u25cf the level of interest that listings are generating;
\u25cf the demand changes in an area, by taking seasonality, special events and hotel prices into account.<\/p>\n\n\n\n

Also, the tool automatically changes pricing if the listing is updated: if hosts add amenities, such as WiFi, or a positive review.<\/p>\n\n\n\n

However, The Northeastern University research shows<\/a> the flip side of the method. Amazon sellers that use algorithmic pricing can tweak the price 1-8 times per day, leading to the following issues:<\/p>\n\n\n\n

\u25cf it’s harder for online buyers to track prices over time and to find the best deal;
\u25cf such virtual multi-store marketplace platform sellers won the buy box more frequently, accumulate higher sales volume and more customer feedback, and later, even if they raised their prices, they might still win the buy box.<\/p>\n\n\n\n

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1.4 Pricing Tactics<\/h3>\n\n\n\n

These are the techniques that help you to tweak pricing to your short-term objectives.<\/p>\n\n\n\n

Price positioning <\/strong>sets pricing below the market to compete against established sellers.<\/p>\n\n\n\n

The multi-vendor marketplace center Etsy set 50% fees to acquire the sellers which were already selling on ecommerce marketplace solutions Amazon or eBay.<\/p>\n\n\n\n

Discounting<\/strong> helps to sell old stock, increase Average Order Volume or response to competitive pricing tactics.<\/p>\n\n\n\n

Amazon created a Discount<\/a> Provided by Amazon<\/strong> program, to compete with low-cost rivals by forcing<\/a> discounts on its third-party sellers. The online marketplace trading center covers the difference between the discount and the normal price for the vendors.<\/p>\n\n\n\n

A Discount Provided by Amazon<\/em> program<\/a>:<\/em><\/p>\n\n\n\n

\"what<\/figure>\n\n\n\n

Loss-leader<\/strong> tactic implies selling a product at a loss-making price to attract customers who will also buy more profitable products.<\/p>\n\n\n\n

It helps to upsell, cross-sell, increase the total shopping basket value, and stimulates retention.<\/p>\n\n\n\n

Besides, there are tactics which online shoppers perceive unfair, and that is better to avoid, such as drip pricing<\/strong>: when a headline price is advertised at the beginning of the purchase process but is followed with additional fees.<\/p>\n\n\n\n

Airbnb used such a technique but was forced by the court<\/a> to display the services as part of the headline price.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n
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<\/span>2. Pricing-Influencing Factors<\/span><\/h2>\n\n\n\n

Besides the pricing strategies, it’s necessary to take into account your virtual multi-store marketplace platform type and the level of pricing transparency you enable to your clients.<\/p>\n\n\n\n

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2.1 Marketplace Type<\/h3>\n\n\n\n

Service eCommerce marketplace<\/a> solutions<\/strong> pricing strategies are tweaked to the service characteristics.<\/p>\n\n\n\n

Car-sharing online multi-vendor platforms use load-dependent pricing<\/a> and are setting the price on the basis of the available drivers’ number. Besides, such platforms set<\/a> a time and distance-dependent base price.<\/p>\n\n\n\n

The online shopping mall platform Uber is setting pricing on the basis of<\/a> the expected earnings per ride, expected idle time per ride, and the entry rate of drivers.<\/p>\n\n\n\n

Zopa, lending and borrowing C2C-marketplace<\/a>, offers personalized rates to each borrower:<\/p>\n\n\n\n

\"what<\/figure>\n\n\n\n

However, the multi-vendor marketplace center sets the constant pricing range<\/a> for investors.<\/p>\n\n\n\n

Physical product online marketplace trading centers<\/strong> charge a certain percentage, as Etsy 3.5% or Amazon 10%, or, like eBay, offer a different pricing model, auctions: the ability to set a unique price for each item and to see how much buyers are willing to spend.<\/p>\n\n\n\n

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2.2 Price Setting Transparency<\/h3>\n\n\n\n

Your online shopping mall platform clients should understand, why one product is more expensive than the other; it is good if your sellers are also adopting such an approach.<\/p>\n\n\n\n

As European Commission pointed out<\/a>, the virtual multi-store marketplace platform Airbnb has many unclear price components besides the basic service fee: cleaning fee, additional guests fee which are set chaotically<\/a> by sellers:<\/p>\n\n\n\n

\"marketplace<\/figure>\n\n\n\n

The online shopping mall platform offering standardization<\/strong> and your marketplace pricing policies can help to increase pricing transparency for both sellers and customers.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n
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<\/span>3. Pricing Policies for Sellers<\/span><\/h2>\n\n\n\n
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3.1 Setting Pricing for Vendors<\/h3>\n\n\n\n

There are some following factors that influence price setting for sellers.<\/p>\n\n\n\n

Keep in mind your sellers’ marginal costs<\/strong>.<\/p>\n\n\n\n

OpenTable, the eCommerce marketplace solution for restaurants, where margins are very thin, established<\/a> low pricing for sellers with no monthly fee:<\/p>\n\n\n\n

\"connecting<\/figure>\n\n\n\n

A digital goods’ virtual multi-store marketplace platform E-Junkie sets<\/a> a relatively large monthly fee, since digital goods, once created, can be sold many times with no further costs:<\/p>\n\n\n\n

\"buy<\/figure>\n\n\n\n

If your multi-vendor marketplace center sells different types of products that vary in marginal costs, set different pricing for different product categories, like Amazon<\/a>:<\/p>\n\n\n\n

\"online<\/figure>\n\n\n\n

Your multi-vendor marketplace value for sellers<\/strong> is also a pricing factor, and may include the following components:<\/p>\n\n\n\n