Fire Sale Pricing and Automated Shopping Carts

Fire sale pricing is as about as urgent as you can get when it comes to e-commerce, and urgency can be the deal clincher for many.

Fire sale pricing is pretty simple: you begin offering your product at a low price; once a specific time period elapses or a nominated number of products ares old, your automated shopping cart will boost the price to a predetermined amount.

Okay, so why would you want to use fire sale pricing (also called tiered pricing)?

One of the most popular uses is to encourage early adopters of your product. For example, let's say that you send out a newsletter to your email list saying that you have a new product, and once a specific date is reached, the introductory pricing that you are offering to your valued customers will be done and the price will go up to its normal level.

This creates a sense of urgency in your potential buyers (they're on a deadline) and if you've done well in your marketing and customer service, those customers will respect and appreciate you offering them a quality product at a discounted price.

A classic time to use a fire-sale strategy is when a product is in short supply. This scarcity can either be artificially imposed (for example, you're selling an ebook but will only be selling 200 of them) or it can be due to physical restraints (if you're selling a printed and bound book, and there are only 100 copies, then you can't sell more than that).

At this point, if you have an automated shopping cart, you can set up unit sales as a trigger for price increases. Using the example of 100 books from above, you could set an initial price of $10 until 50 units are sold. Then, have the price go up to $15 until 75 units are sold, and then lastly have the price go up to $20 until all 100 units are sold.

A number of goals are accomplished with this type of tiered pricing: first, the buyer gets a sense of urgency. They can either pay $10 now, or wait too long and have to pay $20 (or not get a copy at all). Second, tiered pricing works on the process of supply and demand, as the supply goes down, the demand is worth more, meaning that you can charge more money for the same product because its scarcity has boosted its value.