New Tiered Pricing Structure at Shopping.com

Not long after announcing that they would lower CPC rates by as much as 57% for certain categories, Shopping.com has again announced a new pricing structure that should help a good number of merchants lower their costs and increase their return on investment (ROI).

The issue with the current flat CPC rate system that most shopping engines use is that a merchant selling an electronic device that costs say, $5 is paying the same per-click as someone in the same category selling a device for $500.

In order to get the same return on their comparison shopping investment, the former merchant would have to convert at a rate of 100x greater than the merchant selling the $500 product–which is quite unreasonable to expect. As a result there is little incentive to list for any products below a certain price point, even though those may convert at a relatively high rate.

With their new structure however, lower ticket items will have lower CPC rates, while higher priced items will see an increase in CPC rates. The graph below provided by Shopping.com illustrates the effect this will have:

Their main goal is to minimize the discrimination of pricing of items, and attempt to balance out the COS (cost of sale) % among all products offered by a merchant.

For merchants offering a majority of or only high ticket items, they may see an increase in their spend off the bat, but overall the proportions shouldn’t be too drastic since the items they sell are priced so high to begin with.

The new rate card is available on complete here.