5 Pricing Mistakes That Destroy E-Commerce Margins

Case study: A heating and sanitary wholesaler – the starting point

A mid-sized Polish wholesaler, several thousand SKUs in the catalog, selling on Allegro (Polish marketplace) plus its own webshop, run by 1–2 people who set all prices manually “by feel”, traditionally in Excel. That’s the real profile of a Dealavo customer we have supported since June 2022 (over 4 years). The company remains anonymous, but we share real results.

The starting point (before Dealavo) looked like this: clicking through product pages on Allegro and price comparison engines every day, price decisions with a 12–24 hour lag, a chronic fear of “selling for 1 zloty” after an Excel error. Allegro commissions (8–15%) were not included in the margin calculation – so prices remained identical to those in the store. Result: margin on Allegro 10–20 percentage points lower than in the online store, but in the reports it looked the same.

The client rolled out the Premium module of our Dynamic Pricing in mid-2022. He was making each of the five mistakes described below at the start – and each of them was resolved month by month.

Mistake 1 – Manual price adjustment (“clicking through”)

Manually checking marketplaces and price comparison engines every day eats 5–10 hours per week, and yet half of the competition’s price changes go unnoticed. This is the most “hidden” cost item in online commerce, because no one writes it into the budget: “someone in the company is sitting and typing into Excel”.

In our wholesaler case: the owner clicked through several hundred SKUs every day between Allegro, Ceneo and his own store. Rhythm – mornings, 6–8 am, before the warehouse opened. Result: reactions to yesterday’s competitor moves, some of them already 24 hours old. Changes competitors made in the afternoon only reached him the next morning. Customers who had seen the higher price of his offer during that day never came back.

Solution deployed: pricing rules instead of manual work. The system checks competitors on set cycles (for this client – hourly for the most dynamic SKUs) and adjusts the price within the rule’s limits by itself. Universal takeaway for smaller stores: even without a dedicated tool – start with a spreadsheet with alerts for the TOP 50 products. Full automation is the next step, once you see the alert system working well. See how automated pricing rules work, killing this mistake at the root.

Mistake 2 – The same price on the marketplace and in your own online store

Marketplace commission (8–15% of gross price) plus fulfillment costs plus transaction fee together are 10–20 percentage points of margin that you hand over to the external platform. If you have the same price on the marketplace and in your own store – your marketplace margin is lower by exactly that amount. And no one sees it in Excel, because in the “price” column the same number is written.

In our wholesaler case: at the start, prices on Allegro and in the webshop were identical. The client seemingly “earned” the same on Allegro as in the online store – that’s what the monthly revenue report showed. But the real net margin (after commission, Smart shipping, VAT on commission) was 12–15 pp lower per order. For a category that makes up 40% of revenue, that’s a huge loss.

Solution deployed: two separate channels = two different pricing strategies. The pricing rule on Allegro accounts for the category commission, Smart cost per shipping method, 1.2% transaction fee and 23% VAT on commission. The price on Allegro is higher than in the store by a margin covering these costs – plus a minimum margin. A separate rule applies to the store itself, without marketplace commission.

Marketplace commissions typically range from 4–17% gross – a full commission table by category can be found in the article Costs of selling on marketplaces.

Mistake 3 – 100% portfolio automation all at once

“If I’m setting up an automation, it might as well monitor everything” – that sentence usually ends in a spectacular fiasco and a month of fear after which no one on the team wants to switch the automation back on. Even a well-configured automation across the entire portfolio from day one is an invitation to disaster: a seasonal product marked down in the middle of peak season, a bestseller SKU pushed to the minimum price, a brand promotion for which you forgot to add an exception.

In our wholesaler case: the client started with 20% of SKUs – commodity items with the highest price dynamics but a lower unit margin. The rest of the catalog (80%) continued to be managed manually, deliberately, with the ability to react quickly to exceptions. A month later, another 30% was added (commodity products with higher margin). Target state after a year: 80% SKU automation, 20% manual (bestsellers, clearances, limited items).

Universal takeaway: start pricing automation with 20–30% of products with the highest price dynamics. Adjust the rest – manually and deliberately. Scale the automation month by month based on what you see in the data – not by “how many SKUs we managed to configure”.

Mistake 4 – Copying the cheapest offer in the category

The cheapest seller on the product card is often someone who miscalculated, is clearing leftover stock, or is deliberately generating traffic at the expense of margin to lure customers to their own store off the platform. Copying his price 1:1 means: repeating someone else’s mistake, or even adopting his market-exit strategy.

In our wholesaler case: a classic scenario from the first months – a competitor cut the price of a key SKU by 5% every two weeks. The client (without appropriate rules) dutifully followed. After a year, he was selling the same product 30% cheaper than at the start, at a loss per order. The competitor, as it later turned out, was leaving that category and clearing stock – six months later he disappeared from the platform. But margin never recovered.

Solution deployed: a “TOP 3” rule instead of “MIN”. The system reacts to the median price of the top 3 or top 5 cheapest offers – not the extreme minimum. Also track who started the price change, not just the fact of the change. If one player systematically lowers prices while the rest of the market holds level – it’s most likely that one player’s mistake. Good competitor pricing data shows change history per seller, so you can tell whether it’s an outlier or a category trend.

Mistake 5 – No price floor (Floor Price)

Without a minimum price, an automated rule can drop below cost if a competitor does it first. This is the simplest and at the same time the most dangerous problem on the list – a single misconfiguration eats a category’s weekly margin.

In our wholesaler case: the client sets the Floor Price directly from the ERP feed. Automated rules have a defined limit below which they will not fall under any circumstances – even if the competition goes to zero. Formula for the minimum price at this wholesaler: purchase price + minimum margin (5–8% depending on category) + marketplace commission + shipping cost + VAT on commission.

The minimum price should also account for the Omnibus Directive – when prices are lowered automatically, the lowest price of the last 30 days must be displayed, so that a promotion computed by the rule does not violate the regulations.

Decisive factor: the minimum price must be updated together with the purchase price – if the supplier raised wholesale prices but your minimum price still shows the old values, you’re back to selling below margin. That’s why in this case the minimum prices are pulled from the ERP feed – synchronization runs automatically, the price floor changes with the purchase price, without manual intervention. Universal takeaway: Floor Price = purchase price + minimum margin + marketplace commission + shipping cost. Without accounting for this formula – please don’t automate.

What changed at the wholesaler after 4 years with Dealavo

Four compounded changes: pricing rules instead of manual clicking, selective automation (80% of SKUs), different pricing strategies per channel, a “what the competition is doing” dashboard instead of a daily tour of price comparison engines. Year-by-year results since 06.2022 below.

• Time savings: from 15–20 hours per week (manually clicking through Allegro listings and price comparison engines) down to 2–3 hours per week (rule supervision and exception handling). Roughly 85% reduction.
• Margin increase: +6–8 percentage points on commodity categories (heating, standard sanitary). Separately on Allegro: +12 pp in categories with commission of 11%+, thanks to introducing a separate per-channel pricing strategy that accounts for the full commission structure.
• Other KPIs: reaction time to competitor price changes dropped from 24 hours to under 2 hours. Zero “sold below cost” incidents in 4 years since introducing a price floor. About 30% more price tests per year – possible because the team now has time for strategy instead of clicking through.

Important – none of these results come from advanced optimization. All of it is a consequence of eliminating the five mistakes described above, one by one, in the first 6–9 months.

What this means for you if you run a small online store

Four universal takeaways that work regardless of whether you have 200 SKUs or 20,000.

1. You don’t have to automate everything – start with 20–30% of your assortment with the fiercest price competition (usually standardized commodity goods, electronics, household chemicals). Manage the rest of the catalog manually and deliberately.
2. Don’t sell on the marketplace at the same price as in your own store. Platform commissions eat 10–20 pp of margin – you either need to claw that back in the price or accept that the marketplace is a loss-making traffic channel.
3. Track who started the price change (cause), not just the fact that the price fell (effect). Following an outlier is the way to clear inventory at the price of someone exiting the category.
4. Don’t copy the cheapest offer – it’s most likely a competitor’s mistake or exit strategy. React to TOP 3 or TOP 5 of the ranking, not to MIN.