In this post, we discuss how to price Amazon FBA Items. And, 4 different Amazon Pricing Strategies to get more sales.
Price is a big determining factor when selling on Amazon and selling in general. Did you know 9 out of 10 shoppers price check on Amazon and constantly look for deals?
This doesn’t mean that you always need to price low and heavily discount your products. This just means you need to price strategically. You need to think of when, where, and how specifically.
Price affects the buy box, ranking, and conversion rate which are all important factors in order to get sales.
We know you want to have the highest sales & profits possible but when you’re just starting that could be very difficult as you simply can’t just price your product the same way as your competitors.
So, how do price Amazon FBA Items? Before anything else you need to do the following:
- First, you need to know all your numbers.
- Know the average prices of the top competitors
- Know the prices of other competitors
- Check where your product offering comes in?
- What does your product offer that will affect the price?
- What are your goals?
- What is your long-term plan?
1. LAUNCH PHASE PRICING
Price as low as reasonably possible.
More sales lead to more reviews which lead to more sales and a never-ending closed loop of positive effects.
You’ll want to do this early on as Amazon is helping you during this honeymoon phase. The ranking is really hard. Like really hard even for seasoned Amazon FBA sellers.
So, this is your only chance to get help. After that, it will be so expensive to rank.
Your sacrifice in price reduction is worth it because you’ll just spend so much on advertising later on if you don’t rank high. The cost will be the same.
2. 6 - 12 MONTHS LATER PRICING
This is where you test pricing higher. Amazon will dictate your price. But don’t overdo it, pricing from $15 to $25 is a huge flag on Amazon. Increase it slowly at $1 a day.
If you notice that sales are still consistently coming in without a loss in your unit sessions then that’s awesome.
When you get more data analyze the effect. Sometimes it’s better to have a lower unit session percentage and higher ACOS/TACOS if the profits are worth it.
Having 50% unit sessions is great but you might be leaving money on the table. For example, you might not be spending enough on PPC which will result in more sales.
20% – 30% unit sessions is already a good number. But this will be up to you as you’re the one who knows your profit margins.
That’s why I mentioned in the beginning that you know all the numbers involved from the product, shipping, Amazon fees, overheads, custom fees, taxes, etc.
3. PRICE DEPENDING ON SEASONS/EVENTS
- Don’t be afraid to raise your prices if the demand is higher – For Example, if you sell winter boots then you can set the price higher during winter.
- Be aware of the economy and price accordingly – COVID really shook up the prices and even the war between Russia & Ukraine. However, be ethical and don’t take advantage of the suffering of others.
- Price effectively during big events such as Prime Day, Black Friday, & Cyber Monday – Amazon takes into account all your pricing history so be careful about jacking up your price just before as you don’t want to mess up this important event. If you’re looking for a massive boost in sales, Prime Day is the one to circle on your calendar. Not only do more people sign up for Prime memberships on that day than any other, but they also convert (18.6%) and spend the most, too. More than both Black Friday and Cyber Monday.
- Adapt your prices during the holiday season – Demand is really high but competition is also cut throat. Test your prices and check your numbers. Be prepared as the bulk of the buying happens during the 2nd to 3rd week so be prepared.
4. TEST AMAZON’S PRICING TOOLS
Automated Pricing – Amazon offers a free automated pricing tool that can adjust your prices quickly and automatically against your competition to increase your chance of becoming the Featured Offer.
You can try the:
- Competitive featured offer – The Competitive Featured Offer rule allows you to set your price to be below, match, or above the Featured Offer. Repricing stops when you are the Featured Offer. This rule type is useful when there are multiple sellers offering the same product.
- Competitive lowest price – The Competitive Lowest Price rule allows you to set your price to be below, match, or above the lowest price. If you are the lowest-priced offer, Automate Pricing will compare your price to the next lowest price. This rule type is useful when there are multiple sellers offering the same product.
- Competitive external price – The price of your SKU can match or be capped at the External Price. The external price is the lowest price for this item from other retailers and does not include prices from other Amazon sellers. Your offer may be ineligible for the buy box if Your Price + shipping is greater than the competitive price.
- Based on sales units – You can decrease the price of your SKU based on the sales volume target that you select within a set time period. This rule type is useful when you want to change the price based on your sales volume, e.g. liquidation of excess inventory or demand-based repricing.
- Create your own rule
Just choose the listings you want to enroll in, set price limits, and let Amazon help keep your prices sharp 24 hours a day, 7 days a week— while you focus on other aspects of your business.
5. SOFTWARE PRICING TOOLS
According to Sellerapp, on average, 60% of high-profit-making Amazon sellers (a revenue of about $3 to $10 million) always use a good Repricer tool.
Keep in mind they are paid tools. Be strategic and know what you want out of these tools. The free pricing tools offered by Amazon could do just as well.
Check out some of the tools in this link.
We hope we gave you some insights on how to price Amazon FBA Items.
Good luck on your Amazon selling journey! We have more helpful posts on our blog if you want to learn more.
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