Is the Keystone Pricing Strategy Right for Your Shopify Store?

The keystone pricing strategy is a simple block pricing formula that dates back many years. It was originally used by brick-and-mortar stores—stores with a physical presence and location. The formula simply doubles the base price of the product.

In other words, if you bought a T-shirt for $5 at cost, you would sell it in your retail stores for $10. If you use triple keystone pricing, you would sell the T-shirt at $15.

Read on to learn the advantages and disadvantages of keystone pricing and whether this pricing strategy is right for your Shopify store.

Advantages of Keystone Pricing

• Simple to calculate (typical retail markup)
• Gives you the flexibility of being able to include a discount if you are struggling to sell your products
• The high markups give you high profit margins
• You are generally covered if there are high overhead costs

Disadvantages of Keystone Pricing

• The high markup of prices can make your products too expensive, which can send your customers to your competitors
• Discerning whether modern day prices should be increased or decreased is more work than it used to be
• Doesn't consider your competitors, which could price you out of the market

Should You Use Keystone Pricing?

The keystone pricing strategy, a brick-and-mortar store strategy, may not be a good fit for an online shopping business. The overheads of an online store and a physical store are vastly different. Additionally, you need to monitor many other online stores to make sure you are not pricing yourself out of the market, and consequently out of business.

Instead, integrate your store with a pricing optimization tool like OP, which will scan competitor prices and customer behavior in order to target your clients with optimized prices designed to boost revenue without increasing your expenses.