What is Amazon Product Pricing?
Product price = product cost + platform commission + expected profit + other
FBA product price = product cost + platform commission + FBA first-mile fee + FBA fee + expected profit + other
When setting prices, sellers often take into account multiple factors such as production costs, profits, and their own product quality before setting prices. For Amazon sellers, the following pricing formula can be used as a reference when setting prices:
Product price = product cost + platform commission + expected profit + other
FBA product price = product cost + platform commission + FBA first-mile fee + FBA fee + expected profit + other
What factors affect Amazon product pricing?
1. Platform commission: Amazon sellers sell products on the cross-border e-commerce platform Amazon. Amazon will charge different commissions based on different categories.
2. Product quality and procurement cost: We know that the production cost of a product includes raw materials, research and development, manufacturing, transportation, and factory profits. If sellers make improvements or micro-innovations to their products in order to ensure quality, costs will also increase.
However, not all Amazon sellers have factories. Amazon sellers who don’t have factories need to develop and purchase products on the market. The level of purchasing cost has a direct impact on pricing. If the purchase cost of a product is high, the seller will naturally set a higher price in order to ensure profits.
3. Market supply and demand: Market demand has a significant impact on product prices. When the market is chasing after a new product, causing it to be in short supply, its price will also increase accordingly. However, when products are distributed in large quantities by merchants online and offline, buyers' choices become diversified, sellers' profits are diluted, and prices are also affected.
In addition, each industry develops new products at a very fast speed. When new products appear, the attractiveness of old products to buyers will decrease, and price reduction is inevitable.
4. Expected profit: Profit is also an important factor affecting prices. As a seller, you need to invest a lot of manpower and material resources, and when selecting products, you will consider whether the product has a market and profit. Otherwise there is no need to develop and promote. Sellers' expected profits for their products vary, some may be several times the cost, and some may be several percent.
5. Brand image positioning: Different product brand positioning has different price positioning. Brands that target the low-end market will have lower prices; brands that target the mid-end market will have moderate prices; brands that target the high-end market will have higher prices, but their products and services will also be high-end.
6. Promotion strategy: Each e-commerce platform will have promotional activities with different themes. Cross-border e-commerce platforms like Amazon have Member Day in mid-July, and "Black Friday" and Christmas sales in the second half of the year. Whenever major holidays or promotional festivals come, Amazon will adjust prices on a large scale.
7. Capital turnover: In order to reduce risks and quickly turn over funds, some companies will also control and adjust prices. When necessary, we will use the means of small profits but quick turnover to stimulate the market.
8. Amazon store marketing and promotion fees: If the product is to be promoted on or off the site, corresponding promotion fees will also be incurred.
9. Competitors’ prices: On the cross-border e-commerce platform Amazon, there is more than one seller for a product. Competitors' prices will also serve as a reference for sellers to set and adjust prices.
10. Transportation costs: If the seller chooses Amazon FBA to ship the goods, FBA first-leg transportation costs and costs related to the use of FBA warehouses will be incurred, and the seller will also pass this cost on to the cost.
11. Other factors: such as buyers’ consumption habits, sellers’ product upgrades, and some products that are in stock may also be promoted at low prices.
This is the end of the knowledge about Amazon product pricing in this issue. If you want to get more information about Amazon product pricing, please pay attention and we will continue to answer you~
