October 09, 2019

Vacating Price Point Bands

This is one of the most interesting findings of the past 12-18 months.

In my project work, it is common to see companies vacating low price point bands, in an effort to increase gross margins (and, theoretically, become more profitable).

Look at annual spend per customer ... it was $108.97 back in 2016, it is $96.80 today. The customer is spending $12 less per year ... not good!

Now let's look at where the shortfall comes from.
  • Items $0.01 to $9.99 = down $6.60.
  • Items $10.00 to $19.99 = down $2.00.
  • Items $20.00 to $49.99 (combined) = down $3.70.
The company is clearly vacating items under $50, and is paying the price (from a top-line standpoint).


But not all is lost ... if the brand knows that some customers prefer the lowest pricing bands, it's easy enough to "show" those customers what is still being sold in low price point bands. Just personalize email, print, and home/landing pages for those specific customers with specific pricing preferences.

This analysis is one of many included in "Hillstrom's Pricing".
  • Project Cost through 12/31/2019 = $8,500.
  • Project Cost on/after 1/1/2020 = $12,000.
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