13 Aug

Introduction to Amazon Pricing Strategies

Introduction to Amazon Pricing

When you promote your products on Amazon as a platform your end goal is to get as many sales as you can and get the right and authentic reviews from customers who use your products. Now, understanding the Amazon pricing strategies may seem a little complicated, however, this platform also takes all the necessary steps to ensure that all their strategies are as transparent as possible.

In this topic we will be taking a closer look at the different ways that Amazon pricing strategies are planned and just what are the different criterias and aspects of choosing the right Amazon prime pricing strategy based on your product and target audience niche.

How to price items?

There is no denying that the most important pointer to perform well on any ecommerce platform is to set the right pricing. In the end how much profit you earn depends on the Amazon seller pricing strategy that you choose to go ahead with.

The best way to price your items on Amazon is by taking care of the following steps;

Get an understanding of your final overhead expenses and costs.
Understand your target audience and the market you will be catering to.
Conduct regular market research and competitor analysis.
Mediate your prices based on market trends and conditions.
Take maximum benefit of the seasonal discounts and important festivals and events.

Keeping all these factors in mind sellers can decide how to price their products in the most optimum way so that they can get maximum benefits from the different Amazon pricing strategies.

Different pricing models on Amazon

In general, before a seller decides to promote their products on Amazon as a platform it is essential that they know about the different pricing models that are available. The basic Amazon seller pricing strategy includes two types of prices which are the item price and the total price.

The basic thing that needs to be kept in mind while pricing the items on Amazon is that based on the pricing model, Amazon tries keeping the price of the products as low as possible for the customers. The Amazon low cost strategy means that the price of a single product can change a number of times during the day.

Opting for the Amazon low cost strategy ensures that loyalty can be driven from the customers end, and this way both the customer and the merchants keep coming back to purchase more products from Amazon. The Buy Box strategy on Amazon is one of the most sought after strategies of all the Amazon pricing strategies that are available. However, having said that as a seller if you are not able to compete and be a part of the Buy Box strategy, there are always other ways that you can still showcase your products and get the required visibility and mileage.

Different Amazon pricing strategies

Once you are aware of the factors to keep in mind while deciding what price to sell your products at, it is imperative to get a better understanding of the different Amazon pricing strategies that you can choose from. Listed below are a few of the most common types of Amazon pricing strategies that sellers follow and observe.

Amazon dynamic pricings: The word dynamic itself means something that constantly changes owing to the external conditions. One of the most common Amazon seller pricing strategies is the dynamic pricing, according to which the price of the products change and readjust based on the supply and demand along with the external market conditions.

Opting for the dynamic pricing that is available on Amazon merely means that the price of your product can change several times in a day depending on the competition and the change in demands. There are five basic Amazon pricing strategies based on which a seller can decide what price to showcase their products at.

Concentrate on demand chain: Keep a close look on how the markets are behaving and which products are selling like hot cakes at any given time on the platform. Basically keep close tabs on what the masses are buying, and then decide your pricing strategy based on the wants of the public.
Offer the lowest price: One other strategy that you can choose to opt for is by offering your products at the cheapest rate possible. Offering products at the lowest possible rates also gets a lot of attention by the buyers on Amazon, however, please be mindful that if the prices are constantly on the lower side, then customers might associate the low prices with your product being of low quality. Those sellers who are struggling with their ratings can opt for this Amazon low cost strategy for a while, but it is not a long term solution for sure.
Offering the highest prices: Yes, you read it right! In this kind of Amazon seller pricing strategy, you sell your products at the highest price possible compared to your competitors. As crazy as this may sound, you can afford to stick to this strategy if you have established a strong base as a seller or a brand. To be able to price according to this strategy it is a must that you have a good number of reviews and ratings that are worthy of being sold at the highest price, because the moment a buyer is looking for the best quality product, they will be redirected to your brand.
Competitor analysis based pricing: One other way of staying in the competition is by looking at the pricing of your competitors and then deciding the price of your product as well. This is known as price matching and we recommend that you do this only if you are totally sure of the USPs of your product compared to those that are being sold by your competitors.
Safe and secured pricings: If you are just starting off with your product display on Amazon and are not too sure about how to go about the different Amazon pricing strategies that are dynamic and volatile in nature, the best thing is to stick to pricing your products that are neither the most expensive nor the cheapest. Play it safe by sticking to a price that can help you break even, create a niche and then experiment at a later stage.

Amazon repricing and price drop algorithms

It is a normal market tendency that in order to make a mark in the market sellers compete with each other by repricing their products. There are a lot of sellers who cut the competition by dropping their prices by $00.01 or 00.01 pounds. When this is what sellers do it is considered as repricing.

Based on the different Amazon prime pricing strategies this repricing can be done in several ways like;

Manual repricing is the process where as a seller you are free to decide how you reprice your products. This process requires you to amend the prices manually through the Amazon seller central channel. The manual repricing strategy will only work for those sellers who have a limited range of products that are being displayed on the platform.

The advantages of manual repricing is that you have complete control and opting for manual repricing gives you a better understanding of the market and your competitors as well. The other repricing strategy that you can opt for is with the help of the Amazon repricing tools.

For those sellers who have a wide range of products on display, it becomes challenging deciding their pricing strategy based on manual repricing. To give them the best understanding of competitive pricings that they can follow there are a number of tools like RepricerExpress and RepriceIt. Tools like this will auto populate a list of all competitors who offer the same products and inform you of their pricing strategy. With these tools you can also set a maximum price limit so that the system does not go below the profitable levels.

Repricing can also be done as per the rule based pricing system which is available. This strategy is quite similar to the manual one in which the seller has a control and sets the rules. They can establish a price limit at which the product price will be undercut based on the competition and the demand of the product as well. The only downside is that this is a bit challenging because the seller has to set it up manually.

Another common repricing type is the algorithmic repricing, which is a far more advanced tool that gives you multiple options of how to reprice your product based on in depth competitor analysis and pricing norms at that time. If used correctly this Amazon seller pricing strategy can be the most beneficial and can give you the best ROIs.

For Amazon repricing to work efficiently it is crucial that there is an algorithm that maps and tracks all the price drops that take place on their platform. Amazon has an inbuilt that recognizes instantly when there is a price change either in the price of the product or the price of its shipping. As a seller who has several products on display it is a must that you make use of this Amazon price drop algorithm that will inform you instantly if there is any fluctuation in the prices of products that are similar to yours.

Tips on selecting the ideal pricing strategy for your brand/products

The ultimate goal is to earn profits through the sales that you make on Amazon, which is why it is crucial that sellers conduct in depth research before deciding the price factor. One tip to keep in mind is to focus on a pricing strategy that is competitive and at the same time rakes in profits.

One means of selecting the right Amazon seller pricing strategy is to consider both your highest and lowest prices that you can charge. This will give you an idea of the average pricing that you can keep for your products. However, when going through this step it is essential that you consider all the components such as shipping costs, customs, payment mode used and even the fee that you pay to Amazon such as FBA or return charges.

Calculate and find out the product’s upper price and based on this keep the prices of your products stable with not too many price fluctuations except on special occasions and events. If you are having trouble deciding the price of your product you can even opt for the help of the Amazon pricing calculator that can give you an estimate of the price that you should charge for your product.

The most important takeaway after reading all this is to understand that it is critical to opt for the right Amazon prime pricing strategies that can help your product and business break the clutter and have an edge over your competitors. Making use of all the tools that are available on Amazon and even otherwise, sellers can now optimize their pricing process and enjoy a lucrative business opportunity on Amazon.

13 Aug

Introduction to Amazon Pricing Strategies