When you are creating an Amazon seller account, there are several important factors you need to consider. The foremost factor which triggers buyer’s interest and helps them convert is the pricing…
If you optimize your pricing strategy well enough, you can consider yourself among the 57% of highly successful sellers who, by the way, price their items below $30.
However, there is no all-in-one solution for all types of businesses as there is no all-in-one pricing strategy for all business owners.
Making a pricing plan is the biggest decision you make: figuring out the competitive prices alone seems like a big challenge, but you also make a whole new list of decisions. In the end, you usually use various combinations of FBA pricing strategies for a flexible and more adjustable pricing plan.
So how to stay on a competitive edge, create a pricing plan with a strong profit margin and align the customer with your store’s long term financial sustainability.
1. Start Slow
Amazon suspended hundreds if not thousands of seller accounts for a sudden increase in sales. If you trigger the algorithm, you have to write a long explanation letter called an appeal for them to reactivate your account. So, stay alert!
2. Pricing Matters
Even though Amazon claimed on many occasions that the pricing does not matter for the Buy Box, the data and the analysis tell the opposite. Mind you, Buy Box is responsible for 82% of Amazon sales.
3. Pricing Plans
Amazon offers two types of plans: Individual and Professional. Individuals can sell items on Amazon for $0.99 per item whereas Professional sellers are allowed to sell unlimited quantities of products for a $39.99 monthly subscription.
4. Pricing vs Fees vs Revenue
Don’t confuse the terms item price and total price (pricing), fees and the final revenue. Your total price should somehow cover the shipping fees, shipping and handling fees, discounts, shipping method, and any other order-related fees. You need to find the golden middle to price your items too high (no one will buy them) or too low (you will not make any profit).
Due to this strategy, every 10 minutes an estimated number of around 2.5 million price changes happen.
To not fall short behind the competition, you can offer your product for as little as $00.01 less to win them over in the Buy Box and close a sale with your customer.
Here, sellers meddle the price manually or use an automated pricing system to ensure they prevent losses at times when all other stores increase their price.
Advice: There will already be a sea of competition in your niche on Amazon, so one thing remains: collect data on their seller ratings and maintain a Buy-box-special-price margin.
Advice 2: If you have products with a heavy profit margin AND loads of competition, use repricing otherwise you will not be able to make any sales.
Advice 3: Add low to zero competition but high demand products to your listing catalog.
Advise 4: Ask for review from your customers but do not be too pushy, otherwise you will get suspended and have to spend time to reactivate your amazon seller account.
As we spoke about manual and automated types of repricing, it’s time to talk in depth about…
Repricing with Algorithms
To concentrate all the resources in one place, sellers turn to a third party software provider to harvest not only the benefits of repricing but also access to the exact and the lowest cost information and have it in one place.
The algorithm determined the best price based on your competition and the minimum/maximum range you chose after calculating all Amazon fees.
Advice: Algorithmic FBA repricer keeps your listing’s prices competitive, grabs a larger portion of the Buy Box and provides more price points.
Advice 2: You can try and reduce the prices any time you want but Amazon will not allow you to raise the pricing too quickly. If you try, it will be another Amazon suspended account case. Just don’t.
Keep in mind that the end goal is first ranks on Amazon. If your pricing is on point, you will sell volumes.
Listing and prices constantly change on Amazon. Don’t consider the price as a fixed feature. Regularly analyze your competition, reprice and stick on page one.