The most competitive retailers are rethinking how pricing fits into their broader strategy. Rather than defaulting to historical data or following competitors’ cues, many are turning to real-time insights to guide pricing from product development through to seasonal promotions.
As the back-to-school season approaches, it’s time to reconnect with the critical “forgotten P” of the marketing mix — pricing — and explore how smarter strategies can translate not just into more traffic, but stronger margins and long-term customer value.
Set Pricing with Purpose
First up, it’s about strategically aligning pricing with your objectives. Whether you’re aiming to maximize revenue, acquire new customers or clear out excess inventory, effective pricing strategies shouldn’t be reactive. Back-to-school season often brings pressure to discount, but retailers of all sizes need to find the balance of making the most of the shopping frenzy without sacrificing margins.
The start of a new school year also represents a golden opportunity to create compelling pricing strategies that not only draw in new customers but also turn them into loyal ones.
Back-to-School Blunders
With that in mind, here are a few back-to-school blunders to watch out for:
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Overpricing or underpricing: Prices that feel misaligned with value can scare away budget-conscious shoppers or needlessly cut into margins. To strike the right balance, measure what pricing experts term ‘willingness to pay’ (how much your audience will pay for a specific product or service).
Selling out or overstocking: Running out of popular products too soon or being left with excessive inventory can also be costly. Leverage forecasting techniques and data to make informed inventory decisions.
Neglecting competitor analysis: Turning a blind eye to competitors’ pricing strategies can leave you vulnerable. Consider the customers they are targeting and establish how your discounts compare.
Overlooking price walls: Consider why $199 feels different from $200. Herein lies the underlying principles of price walls — the moment at which demand drops off a cliff. This can also be down to the so-called ‘left-digit effect,’ a psychological quirk that makes prices just below a round number appear considerably more appealing. Pricing is profoundly influenced by psychology and rounded numbers, such as $30 or $40, may appear to be a more significant expense than $29.00 or $39.99.
Failing to set a reference point: A strategy known as ‘price anchoring’ involves setting an initial price as a reference point. This will serve as the anchor. For instance, if you have a premium version of your product, show it, even if it’s significantly higher than your discounted back-to-school offer. But remember to maintain transparency. Avoid any pricing practices that may seem misleading or deceptive, as this can damage trust.
For a successful back to school sale, consider the following:
- Strategic discounts: Identify key products or services that could benefit from pricing techniques.
- Clear communication: Use compelling language and highlight the savings clearly; for instance, mention that a product is “just $19, down from $24.”
- A/B testing: Experiment to glean insights into whether a strategy is effective for your specific customer base.
- Positioning: Display special offer items prominently, and try to be creative. Take Lego’s offer of desk organizers shaped exactly like its iconic 4×4 brick – perfect for adults and kids alike.
- Create urgency thoughtfully: Timed offers, limited inventory notifications or member-only early access can all nudge consumers to act, but only when done authentically. Utilize countdowns and phrases like “Hurry, this offer expires at midnight” to stimulate demand and encourage decision-making, and consider bundle or exclusive deals. For instance, Apple’s back-to-school offer includes an accessory worth up to $179 — or up to $179 off more expensive accessories when you purchase an eligible iPad, MacBook, or iMac. Kipling is choosing this period to mark the 20th anniversary of its favorite Seoul backpack.If your service includes appointments or reservations, such as school uniform fittings, indicate the limited slots available. And notify customers when stock is running low, offer early access or exclusive deals to subscribers or loyal customers and encourage prompt action.
- Gather insights: The insights from busy sales periods such as the back-to-school period are invaluable. Post-sale analysis can shape your future pricing strategies. Did customers respond to your urgency tactics? What was the average order value? Which products performed best? If your analysis reveals distinct customer segments, tailor future pricing strategies to cater to each group and apply these lessons to your year-round pricing strategies.
Don’t Leave Pricing Behind
In a marketing ecosystem full of tools for targeting, messaging and personalization, pricing often remains an underused lever. But it’s one of the most powerful, and visible, signals a brand sends. Treating it as a living strategy, informed by ongoing data and real customer behavior, is what separates the reactive from the resilient.
Ian Wikström services as CCO and CRO of Priceagent, a self-serve pricing platform that helps SMEs and global enterprises confidently set prices by showing exactly how many customers would buy at each price, and how demand shifts across factors like product feature, sales channel, competitor positioning and more.
