One of the most critical aspect in the success of an Amazon store is pricing of products. If a product is overpriced, it will fail to attract shoppers and make sales. If the price is too low, you will barely make a profit. However, having a competitive and profitable pricing at the same is easier said than done, for many resellers selling on Amazon, they are constantly making the decision to increase or lower their price to either win the Amazon Buy Box or maximize profit. Because of this, the majority of the Amazon sellers heavily rely on an Amazon repricer like BQool to automate pricing adjustments for them. Having a repricer to automate pricing is nothing special, the real challenge lies in creating the Amazon repricing strategies that would both achieve a high Buy Box ownership and increasing your profit.
Discover how to properly price your Amazon products
Repricing becomes a necessary business practice for selling on Amazon, and each product can have many sellers. Before sharing some Amazon repricing strategies with you, you need to know the costs behind your products, these may include:
- Supply and demand: Market demand has a significant impact on product prices. When a new product is introduced to the market and soon becomes popular, its price will likely increase accordingly. However, the price can fall when more sellers enter the market.
- Production costs: This includes raw material, research & development, manufacturing, transportation, and factory profits. For most Amazon sellers, they determine their prices based on supplier prices to ensure that a profit is made.
- The cost of selling on Amazon: Amazon seller fees include the monthly subscription fee ranging from $0 – $39.99, and referral fees ranging from 6% – 20% of a product’s selling price based on your item category. Additionally, a variable closing fee will be charged if your product is in any media category. A smart repricing tool offers a built-in price profit calculator to help sellers calculates the profit and ROI for its users by considering all your costs and Amazon fees.
- Fulfillment and storage fees: The products that you purchase from suppliers and manufacturers to sell via your online store may need to be stored, and this cost can soon add up. Shipping costs also affect selling prices, and inventory storage fees will apply if you choose Fulfillment by Amazon.
- Advertising and promotional expenses: You may offer promotions, including event sponsorships, giveaways, on-site sampling, contests, and discounts, or use Amazon advertising solutions such as Sponsored Products to increase visibility and sales.
- Brand positioning: If you are selling luxury items, for example, you will need to consider setting your prices higher to convey the high-end brand image to potential customers.
All of the aforementioned factors will influence your Amazon pricing strategies. Furthermore, you need to compare and adjust your products’ prices against your competitors on Amazon, where prices change constantly. You need to set your repricing strategies to keep your prices competitive and increase your sales and profits.
Repricing can be done either manually or automatically by a repricing software. To save time and effort, we encourage sellers to use repricing software to keep up with competitors. Here are 5 best repricing strategies for Amazon sellers.
Amazon Repricing Strategies #1. Create your own repricing rule
The most common and widely used pricing strategy is to set the price according to the competitors. This idea is simple as it’s easy to price the products lower, higher, or the same as the competitors to get ahead and stay ahead in the market. Before repricing your listings with any repricing software, you should define a repricing rule based on your anticipated goal. For example, if you want an item to stay competitive, you can create a rule that competes against the lowest-price competitor above your minimum price, so that you will be in a good position to win the Buy Box. If your competitors are equal to or lower than your min price, the rule settings will look for the next eligible competitor above your min price. When you’re in the Buy Box, the Buy Box setting will keep your price competitive to increase the chance of Buy Box ownership. With a specific rule, it will efficiently help you to achieve your goal.
Amazon Repricing Strategies #2. Set minimum and maximum prices
Setting minimum and maximum prices for your repricer is extremely important if you want to maintain a good profit. An Amazon repricing software will adjust prices between this min and max price range to prevent prices from falling below the minimum price. Additionally, the software can also raise the price to the maximum price to maximize profits when your competitors are out of stock.
Amazon Repricing Strategies #3. Avoid the race to the bottom
Customers are price-conscious, setting your products at the lowest price in the market can certainly appeal to them and entice them to choose you over other sellers. However, customers have become increasingly sophisticated, they are now more likely to explore any additional value the product can offer, such as the quality of the product, packaging, shipping time, and the level of customer service based on reviews and feedback. In this case, customers are likely to choose other sellers that are selling the same product at a higher price, if they have better reviews and feedback compared to your store. Psychologically, the lowest price is often synonymous with poor product quality and service, so you don’t always have to be the cheapest seller on Amazon to get the sale.
Amazon Repricing Strategies #4. Customize your competition
You can choose which type of merchant to compete with. If you are a FBA seller, you can exclude non-FBA sellers. You can also filter out by Positive Feedback criteria or with other custom setting features. By customizing your settings, your products will be repriced by following the targeted FBA competitors to ensure your products stay profitable by not competing against FBM sellers with low-ball offers.
Amazon Repricing Strategies #5. Win the Buy Box
As we already know, the easiest way to gain more sales is to win the Buy Box. The Buy Box winner is determined by the complex Buy Box algorithm, and it doesn’t have a set formula for winning the Buy Box. However, there are a few factors to consider when looking to win the coveted Buy Box, which includes:
- Fulfillment Method: If you are a FBA seller, you’re already a step forward on the path of winning the Buy Box. Compared with FBM, FBA sellers have a way better chance of winning the Buy Box because Amazon is in charge of the entire process, to ensure that customers have an exceptional shopping experience.
- Seller Performance: Sellers should maintain a high order fulfillment rate with low returns and low pre-fulfillment cancellations to increase their seller ratings. You can learn more here Amazon measure Seller Performance to see how well you are doing so far.
- Stock Availability: Amazon would not allow a seller with no stock to win the Buy Box. Products going out of stock is a good thing, it shows that you are selling, but it’s your competitors’ best chance to take over the Buy Box ownership. To avoid losing the Buy Box, you should aim to keep your inventory as full as possible.
We hope that our Amazon pricing strategies for your Amazon business have come in handy and will inspire you to create many competitive repricing strategies of your own.
Using automated repricing software that can implement your repricing strategies will ease your life in running your Amazon business and save you a great deal of time and effort. You will never know until you try, so sign up for a 14-day free trial now and enjoy getting buy box with BQool’s Repricing Central.
This blog post was originally published in October 2018 and was updated in September 2020 due to product updates or Amazon policy changes.