How to define your pricing strategy
Pricing across multiple markets
This chapter introduces pricing tactics and principles for those new to pricing. Instead of jumping from zero to complex strategies overnight, it’s best to gradually build foundational knowledge and habits—both for yourself and your team—before advancing further.
It is also particularly relevant for businesses with lower sales volumes per product group (fewer than 200 sales per month per group). At this scale, the available data sample is too small for advanced optimization techniques.
If your business is already operating at a larger scale, we still recommend going through this chapter. It covers essential concepts that are crucial to understand and apply correctly.
Don’t hesitate to start strategic pricing with a limited selection of your portfolio. Ideally, strategic pricing should be applied across all products immediately, but this isn’t always necessary. Many businesses begin by testing on a subset of their portfolio or in a single market, allowing them to refine their processes before full implementation.
From our experience, it often takes 2–3 months before companies fully integrate strategic pricing across their entire product range.
The ultimate goal of pricing is to find the right combination of margin and market share that maximizes long-term profit.
Unfortunately, we don’t live in a world where nothing changes. The problem we face in online retail is that we almost never deal with just one product, and almost no single product has a large enough number of sales for meaningful testing. Additionally, numerous internal and external factors come into play, such as:
How to manage pricing in e-commerce without getting overwhelmed?
The most important and fundamental principle of strategic pricing is not to price products individually but to price them in groups.
Product groups are sets of products that share common characteristics—often based on category, manufacturer, supplier, product age, or a combination of these factors.
There are several reasons for this—we’ll highlight four main ones.
As described in previous chapters, a product manager typically oversees around 8,000 products but can properly focus on only about 50 of them. The rest remain untouched and are often mispriced—mainly because market conditions have changed since the product was first listed, but the price hasn’t been adjusted accordingly. By grouping products, managers no longer have to handle 8,000 individual items but instead manage, for example, just 40 groups.
For each product group, define a set margin (or a minimum margin in the case of dynamic pricing—more on that later). This brings order to pricing, allowing for a clear overview, faster pricing adjustments, better goal setting, and more effective decision-making—for example, determining the ROAS/PNO targets that the marketing team can set while maintaining profitability.
Some product managers may resist this approach because they are used to managing pricing at an individual product level. They may argue that some products within a group need different (minimum) margins. In most cases, however, unifying margins is more efficient. If a valid business reason exists, a new group or subgroup (e.g., “Nike – top products”) can always be created.
Even high-selling products rarely reach several hundred sales per month, meaning that it’s impossible to accurately measure the success of pricing tactics if applied only at the individual product level. Statistics don’t work reliably on such small samples and will typically produce inconclusive results.
Lastly, pricing by product groups helps prevent internal cannibalization. For example, if a customer is choosing running shoes, and you significantly lower the price of one model, they will likely buy that one—but at the cost of not purchasing another pair they might have chosen if the prices were more aligned. Lowering the price of one product can negatively impact sales of similar products within the same category.
As discussed at the beginning of this chapter, the first step is to group products into homogeneous sets that will be managed together.
When creating product groups, ensure that:
The grouping makes sense to your product managers and aligns with the business logic they work with.
Tactics can be applied consistently across all products within the group—meaning the products should behave similarly and homogeneously.
Grouping can have multiple levels, and in many cases, it does. However, based on our long-term experience, we do not recommend having more than two levels, as it can overcomplicate pricing management.
By supplier:
By category, then by supplier:
By product managers, then by their suppliers:
By brand, then by season:
The more groups you create, the more control you have over pricing and the more precise adjustments you can make. However, too many groups make analysis and management more complex. The good news is that groups, their count, and their structure can change over time as needed. The key is to start somewhere and refine as you go.
According to our data, the median number of groups is 55, with the highest at 824 and the lowest at 37. In general, larger businesses tend to have more groups.
Additionally, the median number of products is 25,700. On average, this means that each group contains around 467 products.
Next, set a minimum margin for each product group. If you’re just starting, it’s enough to stabilize the margin around a value you’re familiar with and that has worked for you so far.
Once your portfolio is grouped and each group has a defined margin, your pricing becomes more consistent, transparent, and easy to adjust. Instead of managing 40,000 individual products, you only need to oversee 50 groups.
“At Mall Group, we spent several years developing advanced pricing models. However, somewhat paradoxically, 80% of our success came from simply grouping products correctly, defining a shared margin for each group, and ensuring the product team adopted this approach. This gave us great visibility and clear control over pricing.””
David Vacl - ex-Mall.cz, price(f)x
Implementing structured pricing management through product groups and defining healthy margins helps correct many past pricing mistakes.
If you introduce a system that automatically adjusts selling prices based on changes in purchase prices while maintaining the defined margin, you eliminate the risk of selling products below cost.
Predefined margins speed up the listing process for new products.
Product managers can save 10–20 hours per week, reducing costly mistakes. The time savings come from faster product listing, easier price and margin monitoring, reduced cognitive load from constant discussions like "How much should this cost?" or "What is the current price and margin?"
