Should you post your prices online?

Email blasts, paid search campaigns and adwords campaigns allow companies some support for price testing in offers and on landing pages. However, such feedback has limited value. You can test various prices in search ads for response, but it’s tougher to control price visibility once the visitor navigates away from the landing page and back to the product through your menus.

Making pricing decisions based on existing customer response, or conversion on products visitors were not necessarily in the market for is not always good practice. While these tests can help you understand promotional marketing, it’s not the best way to determine optimal catalog pricing.

GetElastic examines the pros and cons of this strategy with some of the top ecommerce industry professionals:

Carlos del Rio, Director of Conversion Analysis & Digital Strategy with UnBounce:

The short answer is yes. But, there is a major caveat. Don’t do public testing. There are many places where it is illegal to arbitrarily vary your price, and any specific segmentation of that group can lead to other ethical/legal issues. Price testing should be handled like market research. Choose a controlled group and run them through the test scenario and offer them all the same end compensation for their time.

Justin Rondeau, Editor & Evangelist of WhichTestWon:

I’ve never really liked the idea of price testing, and each day we see negative reactions to companies who have conducted price tests via different segmentations, e.g., device used, geolocation, etc.

Prices will undoubtedly impact conversions and unless you are selling luxury goods the best deal will likely win out. However, the second it gets out that you are profiling users based on their device (like Orbitz did) you will lose a lot of credibility with prospective customers.

In my opinion, marketers should keep price testing out of their A/B and MVT tests. There are just so many other ways to optimize a site that will produce solid lifts without sacrificing integrity.

Without reliable testing it’s very difficult to determine how to optimally price your products online.

Split testing live with real customers carries risks. It’s not illegal, but customers who access your site from multiple devices or who clear cookies regularly may spot your inconsistencies. It may also mess with your paid search, shopping engine or email ads that contain prices.

Chris Goward, Co-founder and CEO of WiderFunnel:

Price testing can be very revealing for e-commerce. The traditional economic model that says lower prices always increase demand doesn’t hold up in some cases.

Retailers are familiar with the effect the “95″ cent ending price has. It can communicate a discount and create more demand than other five cent price movements. Recent research also shows price size, boldness, color, sound and cultural considerations can boost sales.

For price testing you should also optimize for net contribution margin, rather than just conversions or revenue. Your goal needs to be to optimize total profit as lower sales with higher margin could be a bigger win than higher sales with lower margin.

Rich Page, author of “Website Optimization: An Hour A Day” and co-author of “Landing Page Optimization”:

I think price testing is fine, and can have a good influence on conversion rates. The issue is more whether the marketer actually has control over the price being charged to test it. Don’t presume you know what will work best, test many different combinations in an MVT for price display (colors, size, location), and savings (monetary versus percentage savings) to find the best converting.

Also, don’t forget to continue your test prices on your product pages through the rest of your shopping cart and checkout, otherwise you will risk confusing (and annoying your visitors).

Lastly, the data you glean from testing your pricing is a variable that has a very short reliably and usability lifespan. Optimal prices for January, after heavy holiday spending, may not be the best price in May, September or the next holiday spending season. Economic and competitive changes constantly affect pricing. Launching new generations or updates of your product or the addition of more product substitutes to your catalog can affect pricing practices as well. A price testing strategy should factor this in, and regular re-tests should be performed to keep your data up-to-date and optimal.

There’s no definitive answer to whether you should test prices or not. There remains arguments for and against. If you do decide to go forward, consider the strategies, controls and measurement tools you need to ensure you are not testing prematurely, testing too narrow a range of prices, and are optimizing for profit, not conversion rate.