Pricing Strategy is the Key of Your Success! Brief Guide
Updated: Nov 1, 2022
Why you should take care of a price?
Don't reinvent the wheel, evaluate the product based on facts
Follow the margin! Or loose it all
Pricing Strategies for your successful Amazon business
1. Focus on Supply and Demand
2. Deliberate Understatement of the Price
3. Reasonable Overcharging
4. Learn from Others
5. Better Safe than Sorry
Personalized Pricing Strategy
Tools that makes everything for you
1. Amazon Cost Calculator
2. Amazon AI Pricing
3. Third-party software
Most effective decision ever
Amazon nowadays is a real masterpiece of e-commerce opportunities. Selling stuff here is really convenient, many things are automated for your comfortable selling. However, there are a lot of challenges that Amazon seller faces. One of these challenges, one of the most important challenges that faces every Amazon seller is choosing the best and most effective pricing strategy.
In this article being a brief guide at the same time our team will share with you a lot of useful information that you can easily use in your already working or future selling campaigns.
It will help you to choose an effective pricing strategy for your Amazon business. We will also add some tools that will help you automate some stuff or determine the prices for your products more accurately.
Why you should take care of a price?
So first is, why we are talking about it? Why pricing is so important?
Method of how you price your product can influence the online presence and credibility of your business on Amazon. The greatest number of Amazon sales happen through organic search and most of them on the first page of Amazon search. That means that it is very important to work out how your product looks and how your potential customer sees your product on this page.
Except a picture, brand, description customers see and pay most of their attention to price.
So it is necessary to make a complex optimization of your product card. Its design might be great but at the same time your price should be appropriate for this kind of product.
And here we are going to some strategies and useful advice talking about pricing.
Don't reinvent the wheel, evaluate the product based on facts
The first advise should be «price realistically». If you want to be competitive, if you want to be more attractive to your potential customers your pricing strategy should be fair.
Don’t forget that Amazon is the biggest online e-commerce platform with a lot of sellers that 100% can sell the same product as you do.
That’s why experienced Amazon sellers do market research before they start selling.
According to that research of competitors, market, trends etc. they choose the best option.
The thing is that if a price for your product is higher than most of your competitors have it will negatively perform on your sales rank. And at the same time if you try to dump the price to lowest on the market people will consider your good as a low-quality analogue.
That implies you need to find a golden mean here: to fit your own interests and interests of the market.
Follow the margin! Or loose it all
Before choosing a certain price you need to do some math and find the lowest low you can afford yourself as a price for your good. Understanding the price range will help you find the average one and fit it to the market trend.
Make time for this math things. It’s important, especially if you’re at the beginning of your way and don’t have enough resources for correcting your mistakes.
Count your total expenses for the good, it may include:
· Purchasing price
· Shipping
· Warehousing
· Customs
· Packaging
· Amazon FBA
· Payment commissions
· Fees
Include everything into your math research, try not to lose a thing. Reliability and accuracy of calculations can cost you your business.
Pricing Strategies for your successful Amazon business
Having studied the basic points of Amazon pricing, we move on to strategies. Next, the most popular and effective pricing strategies for Amazon will be presented and described.
Amazon Dynamic Pricing – Your Base
Dynamic pricing is a very popular strategy among Amazon Sellers. Its essence lies in the fact that you or automated services change the price of a product depending on market trends, economic aspects, supply/demand etc. This changes in price can even happen multiple times a day depending on the dynamism of the market, the number of competitors and buyers in the category.
Today, thanks to trained artificial intelligence algorithms and extensive databases, the seller on Amazon has everything necessary to conduct competitive research and determine a competitive price.
Follow this kind of strategies to find your most effective price point:
1. Focus on Supply and Demand
The market is an independent organism that decides everything by itself. Incorrectly determined demand for a particular product can cause significant losses.
Do not be lazy to do market research or use the services of a specialist so as not to get into a mess.
2. Deliberate Understatement of the Price
For sellers who are just starting to promote their goods on Amazon, a slight reduction in cost relative to competitors can be useful. This way you get more interest and have the opportunity to introduce customers to a new product, earn the first reviews.
But it's worth using it wisely, considering margins and other aspects. No need to overdo it and underestimate the price to the maximum. Too cheap products can scare away customers.
This pricing method can be used to achieve short-term goals, but in no case for the long term.
3. Reasonable Overcharging
Raising the price of your product can also be a good pricing strategy, no matter how strange it may sound.
This way you can win the war of reputation and brand trust, but only if your product is really high-quality and meets its price. Many people, when choosing a product, will prefer to buy it more expensive, but with confidence in its quality.
Once again! Use this strategy only if your product is not inferior in quality or better than your competitors' products.
4. Learn from Others
There is nothing wrong with learning from the mistakes or successes of others, especially successes. If your products are identical to a competitor's product, you can use the competitor's price to simplify the task for yourself.
Nevertheless, we strongly recommend that you determine the price yourself! You and your competitor may have different margins and interests, so their pricing policy may not coincide with what you want to get from the sale of goods.
5. Better Safe than Sorry
The risk of price manipulation may not always be justified, especially in the absence of the necessary information and data. In some cases, this may lead to the complete closure of the project.
Therefore, our advice is to leave everything as it is with the slightest lack of confidence. One today is worth two tomorrows!
Personalized Pricing Strategy
Companies that sell products all over the world use a personalized pricing strategy. Different regions, different economic aspects and purchasing power of the population. Therefore, in some industries, there is a difference in prices for the same goods in different regions.
Based on various data about the buyer: his purchase history, preferences, you can build specific offers.
This way we give the customer a sense of self-importance, and therefore increases their loyalty to our brand.
Tools that makes everything for you
If you don’t have enough time or interest for analyzing, counting stuff there are some tools, that can make it for you.
1. Amazon Cost Calculator
First one is Amazon Cost Calculator. It is free tool on Amazon that helps you to estimate your margin and within determine the best price for your good.
However, there’s one minus in it - not enough clarifications. You can’t include taxes, shipping costs or something.
2. Amazon AI Pricing
Amazon is the biggest e-commerce platform and it would be a great omission if it wouldn’t have its own automated pricing system.
In Seller Central of Amazon you can set an amount of pricing rules for certain ASINs. When the rules are set up Amazon will correct your price according to market trends and mostly to your competitor’s price changes.
Within it there’s a problem with this tool – generally your product price will be lowered and it is good for competition but bad for your profit.
3. Third-party software
Experienced sellers on Amazon do not neglect the use of third-party programs for analytics and more accurate management of their Amazon account.
Such programs as, for example, Helium10 help users to analyze the market more accurately, compare different products of the same categories, view prices and revenue from their sales.
The functionality of such software is impressive and really makes working with an Amazon account more comfortable.
Most effective decision ever
Most effective for any seller starting or already working on Amazon would be to сontact professionals in the field of marketing, finance and sales on Amazon. I'm talking about consulting agencies like us - SalesUp.
Our team consists of experienced marketers who have been working with Amazon sellers of various niches for years.
We use the most advanced technologies and strategies in the field of pricing, marketing, advertising, content and we know what will work for your benefit.
Contact us and we will select the best option specifically for your product or company.
It is better to apply once than to regret the missed opportunities later!