
Consumer spending often slows in uncertain times. To remain competitive in 2025, you must find the sweet spot, pricing your goods to maximize revenue without turning away potential customers. How should you go about doing this?
Consumers Are Becoming Price-Sensitive in 2025
While consumer spending in e-commerce is trending upward, inflation, price gouging and stagnant incomes have decreased people’s purchasing power. As a result, they are becoming more budget-conscious and value-oriented.
This sentiment has been growing for years. In the United States, almost 50% of adults said they became more price-sensitive every month in 2022.
Consumers’ spending habits may change if this trend continues. If they follow growing financial trends such as the 50-30-20 budgeting rule — earmarking 50% of their income for needs, 30% for wants and 20% for savings — how much they spend on non-necessities like electronics and cosmetics may decline.
Common Pricing Mistakes for Businesses to Avoid
If costs are too high, people will find cheaper alternatives elsewhere. However, this is not necessarily a bad thing. Selling fewer items at a higher price lets business owners maintain revenue while decreasing inventory and carrying costs.
This strategy is risky because it may affect brand loyalty, driving longtime repeat customers to competitors.
Already, people are willing to walk away from a sale because of cost. In 2024, almost 50% of online shoppers did not finish checking out because their total was too high. Cart abandonment costs the e-commerce sector $18 billion in potential profits annually.
How to Determine Pricing for E-Commerce Products
In this industry, the competition is growing faster than the market, forcing brands to fight harder for growth. An estimated 24 million online store websites exist, including those of industry giants like Amazon, eBay and Etsy. Fortunately, businesses can carve out a space for themselves if they price their products competitively.
However, before setting a price point, decision-makers must add variable costs — labor, manufacturing and packaging — which fluctuate depending on output. They divide that figure by the number of items they produce.
Fixed costs like website hosting, shipping and marketing must also be considered. Will the company accept those expenses or incorporate them into the product’s price to increase profit?
While absorbing costs may seem like a bad choice, it can be a good business strategy. Take shipping, for instance. Many customers will abandon their carts if they have to pay for it. In retail, sales increase by 1.79% for every 1% rise in stores offering free shipping.
The profit margin is the percentage of the sale that is profit. For example, if an item with $7.50 in variable costs sells for $15, the profit margin is 50%. Business owners should look at what competitors are charging to determine whether that is an acceptable margin.
Which Pricing Strategy Should Online Stores Use?
You can get creative with product pricing depending on the type of goods you sell.
There are several pricing strategies and models to use:
- Cost-plus: Add a percentage-based markup to your production cost to get your selling price.
- Tiered: Provide multiple packages with different features or unique additions at increasingly higher prices.
- Flat rate: Assign one flat cost to a unique item or product line.
- Subscription model: Charge a recurring fee in exchange for continued access to a service or good.
- Value-added: Charge more based on an item’s perceived value. Is it environmentally friendly? Does it provide prestige?
Remember to consider your target demographic and product time when making this decision.
How to Price E-Commerce Products During Sales
How much you discount something and how frequently you hold sales depends on the rules of the marketplace you use, the season you are in and your customers’ spending habits.
If the platform you use does not set a discount you must apply, then you should conduct market research. How much do your competitors mark things down? What sale would make your target demographic buy unpopular items?
You should also consider your inventory and expenses. Do you have any listings that would benefit from a buy-one-get-one sale? How little of a profit margin are you willing to accept?
When it comes to sales, a good rule of thumb is to discount items using percentages unless the order total exceeds $100. For reference, 20% off of $50 sounds better to buyers than $10 off of $50. On the other hand, $100 off of $1,000 seems better than 10% off of $1,000.
Timing is another consideration. Research shows price sensitivity is highest in the morning, dropping by about 0.5% hourly. An early-morning sale could drive more purchases while inspiring a fear of missing out.
Review Your Pricing Strategy Every So Often
How do you decide when it’s time to review pricing strategy? A good rule of thumb is to revisit it whenever a large market shift or holiday is coming up. If you cannot afford to conduct a market analysis occasionally, watch your competitors and take customer feedback. This will help you set prices that will make your products enticing and encourage sales.

Eleanor Hecks
Eleanor is the editor-in-chief at Designerly Magazine where she shares marketing and design tips to help e-commerce businesses thrive. You can find her work on numerous business publications including Due and eLearning Industry.
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