(Source: https://pltfrm.com.cn)
Introduction
As the boundaries between digital services and physical goods blur in China’s retail environment, overseas brands must rethink their pricing strategies to reflect hybrid consumption. Chinese consumers expect seamless integration between hardware, software, and service—and they’re willing to pay a premium for it. This article explores how top-performing brands structure hybrid pricing strategies to capture value across both dimensions.
1. Aligning Price with Value Perception in Both Realms
1.1 Tangible Quality Meets Digital Convenience
Premium pricing must reflect not just materials or craftsmanship, but the ongoing benefits of integrated digital services (e.g., app control, cloud access, user communities). The perceived lifetime value should be a pricing anchor, especially in high-consideration categories.
1.2 Differentiating Between Ownership and Access
Brands that sell both physical goods and digital services (like wearables, beauty devices, or kitchen tech) must decide what’s purchased once vs. what’s ongoing. Paid app tiers or service subscriptions should be clearly structured, signaling where the premium lies.
2. Developing Interconnected Product Ecosystems
2.1 Hardware-First, Software-Second Pricing Model
This model emphasizes initial purchase of a premium device, followed by optional upgrades via digital subscriptions. Consumers can unlock analytics, personalization features, or exclusive content, creating ongoing revenue beyond the physical sale.
2.2 Software-First Add-Ons for Low-Barrier Entry
For lower-cost hardware, brands lead with freemium apps and monetize through digital upsells like AI-powered analytics, premium templates, or cross-device syncing. Pricing here is designed for accessibility with optional high-tier unlocks.
3. Channel-Specific Strategies to Avoid Price Conflict
3.1 Avoiding Cross-Channel Cannibalization
To prevent direct price comparisons, successful brands differentiate SKU formats and feature sets across online and offline channels. For example, retail bundles might include in-person support, while online versions focus on digital features.
3.2 Incentivizing Channel Loyalty
Brands use channel-exclusive incentives—like extended warranties for offline purchases or extra cloud storage via Tmall Global orders—to add value without lowering the listed price. This rewards loyalty while maintaining premium pricing.
4. Using Pricing to Encourage Ecosystem Engagement
4.1 Subscription Discount with Product Purchase
Encouraging digital subscriptions at checkout (e.g., buy a device and get 3 months premium free) locks users into the ecosystem and increases the perceived value of the overall product experience.
4.2 Loyalty-Based Tier Upgrades
Offer auto-upgrades or discounts on digital features to customers who buy multiple physical products. This hybrid model rewards repeat purchase behavior and sustains platform engagement.
Case Study: Japanese Beauty Device Brand’s China Rollout
A Japanese premium skincare brand launched in China with a hybrid strategy combining high-end beauty devices and an app-based skincare coaching platform. Offline, the brand priced devices at full value with white-glove demos. Online, it offered digital-only onboarding, app-controlled routines, and unlockable features via subscription. Exclusive JD bundles included 6-month access to their AI skin scanner, while RED campaigns focused on social proof for the digital tool. This strategy increased digital ARPU by 42% and physical product sales by 28% year-over-year.
PLTFRM is an international brand consulting agency that works with companies such as Red, TikTok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries’ exports in China account for 97% of the total exports in Asia. Contact us, and we will help you find the best China e-commerce platform for you. Search PLTFRM for a free consultation!
