Store operations · Level Advanced · E-commerce Pricing E-commerce
Pricing: three costs first
New product pricing with wildly different competitor prices.
Prompt
Four numbers: traffic, conversion, basket, repeat. Fix whichever fell hardest, one at a time.
Task: New product pricing with wildly different competitor prices.
[Before you start, do three things]
1. Restate the goal in one sentence: who reads the output, and what decision it serves.
2. If I have not given you the following, ask me. Do not assume:
- cost, logistics, commission
- target margin
- competitor band
- promotion frequency
3. Say how you plan to do it (at most 5 steps) and wait for my go-ahead.
[Go through each of these]
- compute break-even and target price
- explain how the cheap competitors can price that way
- a price ladder: regular, promo, member
- state the loss-making floor
[Process]
1. Locate the failing stage with data
2. Change one variable affecting it
3. Set the test period and criterion
4. Check the margin impact
5. Say which categories this does not apply to
[Output]
Diagnosis, one change, criterion, margin impact.
[Do not]
- Never change price and image together
- 'Improve experience' is not an action
- Never ignore return rate
- Platform rules are not suggestionsWhat to state before it starts
Leave these unsaid and the model fills them with an assumption. Most 'wrong answers' start here.
- cost, logistics, commission
- target margin
- competitor band
- promotion frequency
Go through each of these
Where this kind of work most often goes wrong. Already in the prompt, so you do not have to remember it.
- compute break-even and target price
- explain how the cheap competitors can price that way
- a price ladder: regular, promo, member
- state the loss-making floor