In most advertising, price is something the customer discovers after you have made your case. In shopping it is part of the ad. It sits under the image, in a row of near identical images, often beside the same product from somebody else.
That has a compounding effect. Price influences whether people click, clicks and conversions influence what the system learns about your product, and what it learns influences how often you are shown at all. A price that is out of step does not just lose the sale, it slowly loses the impression.
The conclusion most stores jump to is that they have to be the cheapest. That is only true if the product is identical, the offer is identical, and the buyer has no reason to prefer you. Usually at least one of those is untrue, and the useful work is in making the difference visible rather than in matching a number that somebody else can always cut again.
Where price enters the auction
There is no field where you bid your price, but it acts on the outcome in three ways.
Directly, through relevance to what the shopper asked for. A search that includes a budget or a comparison intent will behave differently to one that does not.
Indirectly, through click through rate. In a row of comparable products, a price that is out of line gets fewer clicks, and lower engagement over time reduces how often a product is shown for the same query.
And through conversion. Automated bidding buys what converts. If your price makes the conversion rate poor, the system will pay less to show you, which looks in the account like a bidding problem and is actually a pricing one.
The practical implication is that price problems disguise themselves as campaign problems. Impressions falling on a product group with no change to bids or budget is a signal worth checking against the price position of those products before anyone touches a bidding strategy.
You do not have to be the cheapest. You have to be the obvious choice at your price.
You are compared with the same product, not with your rivals
This distinction matters more than it sounds.
Where your product is identifiable as a known product, through its identifiers, it can be lined up against the same item sold by others. Then price is nearly the whole comparison, because everything else about the item is the same. The photograph is the same, the specification is the same, and the only variables left are price, delivery and whether the shopper recognises the seller.
Where the product is yours, made by you or exclusive to you, there is no like for like comparison. A shopper still sees other products in the row, but they are alternatives rather than the same thing, and the decision is not purely arithmetic.
So the first question about price position is which of those two situations each part of your catalogue is in. Reselling commodity items puts you in a price race whether you like it or not. Selling your own product puts you in a value argument, which is a very different job, and one where cutting price often reduces perceived quality without winning the click.
Many catalogues contain both, which is why one pricing policy across the whole feed is rarely right.
Four ways to be worth more without cutting the price
When you are matched against the identical product, you can still change the comparison.
Delivery. Shipping cost and speed are part of what a shopper is weighing, and a clear, fast, free above a sensible threshold can outweigh a small price difference. Where shipping information is supported in the feed, filling it in properly is one of the few free improvements available.
The unit. Selling a two pack, a refill bundle or a set changes what you are being compared to. The comparison breaks, and the per unit value can be better while the ticket price is higher.
The terms. Returns window, warranty, included accessories, assembly. These are reasons to choose a seller at the same price, and they belong where a shopper sees them.
The recognition. A brand a shopper has heard of, a page full of substantive reviews, a store name that appears in the results when they check. This is slower to build and it is the one that lasts.
None of those require you to be lowest. All of them require the buyer to be able to see them before they click, which is why the feed fields and the page above the fold matter as much as the price itself.
When cutting the price is the right move
Sometimes it is, and it should be a calculation rather than a reflex.
Here is a worked example with invented figures. Say a product sells at $60 and contributes $22 after product cost, shipping and fees, and it currently gets 100 orders a month. Cutting to $55 leaves $17 of contribution. To stand still on contribution the store now needs about 130 orders, roughly a third more, purely to break even on the decision.
That is the question to answer before the price changes: how many more orders does this need, and is that plausible from the position we are in. If a small cut moves you from the middle of the pack to the front and the category is genuinely price led, it can be. If it moves you from slightly high to slightly less high, it almost never is.
The second consideration is whether the cut is reversible. Prices are easy to lower and hard to raise, particularly once a segment of your customers has learned the lower number. A time bound promotion answers the question with less permanent damage than a permanent reduction, and it gives you a clean before and after to read.
Sort the catalogue by price position
Rather than one policy, group the catalogue by where each product sits and treat the groups differently.
Products where you are clearly well positioned deserve budget and a generous ceiling, because the click is more likely to convert and the comparison works in your favour.
Products sitting near the middle are where the offer work pays. Delivery terms, bundles and page quality can move the decision without moving the price.
Products where you are well above the comparison need a decision rather than a bid adjustment. Either the price comes down, the unit changes, or they come out of paid acquisition and earn their place through search, email and add on sales to customers already buying.
The mechanics of this are the same as margin banding, and in a feed they can share the same custom label approach. In fact the two overlap usefully: a product that is both thin on margin and poorly positioned on price is a product to stop advertising, and one that is healthy on margin and well positioned is where budget should concentrate. The list of products that are both is usually shorter than people expect, and it is where most of the profitable spend lives.
Keep the price honest across every surface
None of the above works if the price you submit is not the price on the page.
Mismatches are common and they are mostly mechanical. A sale ends on the store but the feed still carries the old value because it updates on a schedule. Currency or tax is presented differently in one place than the other. A discount applied in the cart is not reflected in the listing. A price feed pulls from a field that has not been updated since a bulk edit.
The consequence is worse than an inaccurate ad. A price mismatch is a data quality problem, and repeated mismatches put the whole account at risk of restriction, which costs you every product rather than the one that was wrong.
So the operational fix is to make the feed follow the store automatically and quickly, particularly around promotions, and to check the day a sale starts and the day it ends rather than assuming.
It is dull work. It is also the cheapest kind of visibility there is, because it does not require winning anything. It only requires the two numbers to agree.