How the NYOP Pricing Strategy Helps Online Store Owners

Hermes_Fang

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Telling your customers to name the price they want to pay for your product or service seems weird. Who wouldn’t want to pay the lowest price possible for a product? The Name-Your-Own-Price (NYOP) concept, first borne about years ago, has become much more of a fable now.

However, this method actually helps you build a great relationship with customers when used in the right circumstances. But can this pricing strategy make profits for the modern eCommerce owner? If so, how can you go about it? Well, you’re about to find out.

Case Study of Pay What You Want

Let’s get a little backstory on the history of businesses that have used this method in the past:

Priceline

Priceline is an online travel agency that helps clients find flights, hotels, and all types of rentals. They were renowned as being one of the first to implement the name-your-own-price strategy. Customers could state the price they’re willing to pay on their platform, and the algorithm matches them with a suitable seller. If the price was too low, the client had to wait a set period of time to make another offer. However, the company deleted this pricing strategy from its site in 2020.

Garmentory

Garmentory was another company that linked buyers with sale merchandise from contemporary designers. They introduced the Name-Your-Own-Price strategy to stand out from other companies offering the same services. Buyers could then negotiate for the price of dresses and get these dresses lower than the stated price on the site.

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How to Utilize the Name-Your-Own-Price Strategy

Most store owners who have used the Name-Your-Own-Price strategy have commented that it wasn’t an excellent way to profit. Instead, it is better to just clear inventory of slow-moving products. As a contemporary e-commerce store owner, how can you use this strategy to your advantage? Check out these few ways below:

1. Pricing Surveys

If you’re launching a new product and have some difficulty getting the price right, using the Name-Your-Own-Price strategy is a great way to find out how much your audience is willing to pay. You can just put out some units for sale and put them on a limited offer, and buyers can name their price for the product. However, you should include a threshold price to prevent them from bidding too low.

2. Product Bundles

Have you got some related products in your inventory that are moving slowly? Using the product bundle and the Name-Your-Own-Price (NYOP) strategy could be a great way to rid yourself of these products while making some profit.

If you use Shopify or Shoplazza as your site host, you could simply bundle the products while allowing the buyers to choose what they want to pay for them. However, it is wise to set a minimum threshold that ensures you don’t make losses.

3. Tips and Donations

You could also use the NYOP strategy for requesting tips for businesses. For example, you could leave a box on the checkout page where customers can add some money to the original price of their purchase, either to support your work or the courier driver.

Also, if you’re planning to support humanitarian causes with a portion of the proceeds of your business, you could ask customers to support this cause. By leaving out a pledge box, clients can name the price they want to be added to their bill.

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Harness the Power of the Name-Your-Price Strategy

While the NYOP strategy method could seem like the wrong way to run your business, it could be what sets you apart in an otherwise crowded industry. Also, it doesn’t have to mean you necessarily lose money. You could use it to collect humanitarian donations or conduct pricing surveys. Used in the right conditions, you could build a loyal relationship with your customers.

(Contributed by Oluwafemi Adedeji & Hermes Fang)

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6 years experience in digital marketing. A gracious loser, not a lousy winner.

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