Dynamic pricing and promotions
While it might not be a good idea to set your overall online price level higher, you can ensure profitability by using other methods. As we know, different customer groups can vary significantly in terms of their shopping habits and basket value, and not all groups are as profitable to you.
The profitability can be measured by basket size and the share of high margin products in the basket. Your online store provides you a great amount of valuable information you need to identify and target these different customer groups. By leveraging dynamic pricing and targeting special promotions (personalized e-circulars are a great way of doing so), it is possible to raise the basket size and increase the share of high margin products among customer groups.
One way of increasing the average order value is with personalized discounts. While it might sound counterintuitive, discounts can be used to increase profit margins if they make the minimum purchase higher than their average sale. It is known that for customers, the relative price is much more important than absolute or nominal price. In practice this means that if they are required to buy more of the same product in order to get a good discount, they don’t mind doing so, thus they are willing to spend more money.