How market-based pricing drives cross-border ecommerce success

Pricing might start with basic calculations, but crafting a successful pricing strategy across multiple markets requires much more than numbers alone. When it’s done well, a strong cross-border pricing strategy reinforces brand positioning, boosts profits, maintains a competitive edge, and ensures a smooth, localized shopping experience across global markets. However, an oversimplified approach can lead to shrinking margins, unforeseen expenses, and minimal market impact.

In this blog, we’ll break down the most common pricing strategies for DTC fashion brands, and share our two cents—or pence, kronor, jiao… on what the best pricing approach is for cross-border ecommerce fashion brands.

Cross-border ecommerce is complicated. Pricing is no exception.

Ecommerce technology has made it easier for fashion brands to enter new markets, but achieving ecommerce localization is a whole other challenge. To carry off real growth, both in terms of their customer base and bottom line, brands need a well-planned, carefully executed cross-border strategy. A strong pricing strategy is a crucial piece of the puzzle when it comes to achieving global ecommerce growth. 

What costs influence pricing for DTC fashion brands?

Let us count the ways…

Production and supply chain costs
Pricing usually starts with factoring in production costs, including materials, labor, and supply chain expenses. Order volumes with manufacturers also play a role in determining unit prices. Any disruptions or changes in sourcing can affect production costs.

International shipping costs and warehousing
Shipping costs vary by country and carrier, and warehousing also impacts the price of getting items from A to B—whether products ship from a central hub or local warehouses. Returns logistics also need to be factored in the overall cost of shipping. 

Local taxes
To stay compliant and avoid surprise costs for customers, brands need to factor these taxes into their pricing. For example, the EU has VAT, Canada has sales tax, and in the USA, sales tax varies by state.

Customs charges and duties
Brands need to calculate the correct duties for products in every destination country and include these costs in the order total at checkout to prevent unexpected costs upon delivery). This typically involves understanding trade agreements between importing and exporting countries, along with insurance and freight expenses.

Market forces to consider when setting pricing
Other regional factors to consider such as fluctuations in currency exchange rates, trade policies, and international relations may also require brands to adjust their prices.

Competition
It’s important for brands to consider how global and local competitors are pricing their products. Staying competitive while maintaining profitability is crucial in cross-border ecommerce. Monitoring competitor discounts, promotions, and price changes also helps brands make strategic pricing decisions  and refine their product positioning.

Consumer preferences and price sensitivity
Setting the right prices for products also means knowing who potential customers are as well as what they are willing to pay. Factors such as local incomes, cultural preferences, and shopping habits such as purchase frequency all influence price sensitivity. 

Why a cost-plus pricing strategy isn’t enough for cross-border ecommerce

Fashion brands often use DDP (Delivered Duty Paid) solutions to handle customs and shipping costs upfront, which simplifies the checkout process for customers. While this approach ensures transparency by clearly displaying the total cost of products (including shipping, tax and any customs charges) at the checkout, it can also inadvertently lock brands into a cost-plus pricing model.

What is cost-plus pricing?

As the name suggests, this pricing approach adds a standard markup to the cost of producing products. While it’s relatively straightforward to apply, it requires adjustments to reflect the varying costs and competition in multiple markets. Many fashion brands use a modified cost-plus strategy to keep their profit margins consistent while adjusting for local factors like production costs and competition. This means the markup might vary from country to country.

Unfortunately, cost-plus pricing doesn't take into account regional demand, local competitive landscapes, or purchasing power, which can significantly differ from market to market. By relying too heavily on DDP solutions, fashion brands lose the ability to price products in a way that truly reflects local market preferences and conditions. This approach can result in missed opportunities, as brands are unable to adjust pricing based on factors like local competition or consumer willingness to pay.

So while a cost-plus pricing strategy may seem like a good starting point for entering new markets, other international pricing approaches can offer greater long-term payoff. 

Global pricing strategies for DTC fashion brands

Value-based pricing

Value-based pricing sets prices based on how much customers believe a product is worth, rather than its cost or market rates. This approach allows brands to charge higher prices when they offer clear, measurable benefits, and have something unique to offer.

An example of a brand that does this is Apple. They set regional pricing based on taxes, import duties, currency exchange rates, local market conditions, and logistics and distribution costs.

iPhone 16 Pro Max (1TB):
United States: $1,599
Brazil: R$15,499 (approximately $2,671)
Hong Kong: HK$13,599 (approximately $1,749)
India: ₹184,900 (approximately $2,122)
Canada: CAD 2,349 (approximately $1,638)

Market-based pricing

Market-based pricing focuses on factors such as product cost, customer demand, competitor pricing and the product life cycle. This strategy is extremely flexible but also requires consistent market research in order for brands to stay competitive in multiple markets.

Netflix is an example of a brand using market-based pricing. Here are some examples of how pricing varies for Netflix customers in different countries:
United States:
Standard with Ads: $7.99 per month
Standard: $17.99 per month
Premium: $24.99 per month

United Kingdom:
Standard with Ads: £4.99 per month
Standard: £10.99 per month
Premium: £17.99 per month

Canada:
Standard with Ads: CAD $7.99 per month
Standard: CAD $17.99 per month
Premium: CAD $24.99 per month

Australia:
Standard with Ads: AUD $6.99 per month
Standard: AUD $16.99 per month
Premium: AUD $22.99 per month

India:
Standard: ₹499 per month
Premium: ₹649 per month

Brazil:
Standard with Ads: BRL 18.90 per month
Standard: BRL 39.90 per month
Premium: BRL 55.90 per month

Japan:
Basic with Ads: ¥790 per month
Basic: ¥990 per month
Standard: ¥1,490 per month
Premium: ¥1,980 per month

Psychological-based pricing

Psychological pricing is a strategy based on the idea that certain prices can capture customers' attention and influence their decision to buy. Essentially, small changes in pricing can shift how customers perceive the cost, making them more likely to make purchases.

For example, in Western markets, companies often use charm pricing (e.g., $9.99) to make prices seem lower. However, in Japan, rounded prices (e.g., 1,000 yen) are often preferred, as they are perceived as more honest and straightforward.

Penetration pricing

Brands use penetration pricing to break into new markets by setting lower prices to reach a wider audience. Prices gradually start to increase as soon as products start to build market share and brands establish credibility. 

Uber is a great example of a brand that uses penetration pricing to enter new markets, by offering rides at much cheaper rates than traditional taxis. Uber also leverages promotions and rewards with both riders and customers as an incentive to use their service. 

Premium pricing

Premium pricing is a strategy whereby brands set higher prices for their products to create the perception of higher value or exclusivity. Brands that are first to market often employ this strategy due to lack of competition, as well as luxury retailers as a way to reinforce a premium brand image. 

Market-based pricing helps brands achieve localization in cross-border ecommerce

Ultimately, the best pricing strategy for fashion brands is the one that drives success in cross-border ecommerce. From our experience as a fashion-focused ecommerce platform, market-based pricing is particularly effective for DTC brands that sell globally. Why? Because it allows them to set prices tailored to each market’s unique characteristics, such as local competition, customer expectations, and purchasing power.

That said, this can result in price differences between markets. While adjusting prices based on local factors is crucial, brands also need to consider the influence of globalization, geo-blocking, and wholesale competition when determining their product pricing. So it’s crucial to reach the right balance between keeping pricing competitive and providing a hyper-localized experience for customers.

Localization is a cornerstone of success in cross-border ecommerce. Pricing is just one piece of a larger strategy where localization ties everything together. To create a seamless experience for global customers, brands must consider local currencies, payment methods, delivery options, languages, and preferences—such as how pricing is displayed and the overall user experience. When these elements align, global brands thrive.

Giving fashion brands the flexibility needed to support market-based pricing with Centra

Executing a market-based pricing strategy effectively requires a cross-border ecommerce solution that is capable of handling different price points across multiple regions. This means being able to adjust prices easily without relying on manual inputting or navigating the complexity of managing separate storefronts.

Centra offers the flexibility needed to create custom price lists for every market they sell in. Brands can easily adjust prices, set tax rules, and account for shipping costs on a per-market basis, ensuring that customers feel they are getting a fair deal no matter where they are shopping from.

Cross-border ecommerce is inherently complex, and technology must match this complexity to ensure smooth operations and long-term success in multiple markets. That’s where Centra comes in—offering a seamless, scalable solution that simplifies the challenges of global pricing, allowing brands to focus on what matters most: delivering a consistent and localized experience across all markets.