Pricing is a very important factor in selling on Amazon. Here Yoding will briefly explain it to you: First of all, pricing cannot be too random. It should refer to the pricing of similar products. It is not good to be too high or too low. However, this is not a fixed factor. You can find a balance point in price by constantly testing prices.
Before you start working on your pricing, here are some factors to consider:
1. Product quality and procurement cost: The production cost of the product includes raw materials, research and development, manufacturing, transportation, and factory profit. If the product quality is good, the cost will naturally increase; sellers with their own factories have relatively low costs, while sellers without factories have relatively high procurement costs. In order to ensure profits, sellers will naturally set higher prices.
2. Platform commission: When sellers sell products on the cross-border e-commerce platform Amazon, Amazon will charge different commissions based on different categories.
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.
4. 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.
5. 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 also have different expected profits for their respective products.
6. Promotion strategy: Each e-commerce platform will have promotional activities with different themes. For example, Amazon has 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. Sellers need to pay attention to these in a timely manner.
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. Marketing and promotion expenses: If the product is to be promoted on or off the site, corresponding promotion expenses will also be incurred.
9. Competitors’ Prices: On Amazon, there is more than just one seller for a product. Competitors' prices will also serve as a reference for sellers to set and adjust prices.
Note: Although you can find the selling prices of competitors' products, they are for reference only. Each store has different profit targets and pricing policies, so avoid blindly comparing 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.
Of course, there are many factors that affect sellers’ pricing, and the price profits of products in different categories are also different. If the category you choose is very competitive, profits may be low. If the product you choose is relatively unpopular and has less competition, the profit may be higher.
Pricing Tips
1. Pricing based on product life cycle
(1) New product launch period
When the seller's product is just launched, the following two pricing plans can be adopted.
a. The new product has strong advantages and is a hot seller in the market, which is very popular among consumers. The seller can directly set the price higher, and then gradually reduce the price after the popularity of the product decreases.
b. When a product whose advantages are not obvious, whose competitiveness is weak and it is difficult to accumulate convincing data (reviews and feedback, star ratings, etc.) in a short period of time is first put on the shelves, in order to allow the product to enter the market quickly, the seller can set a lower price. However, it cannot be too low, otherwise you will not be able to earn the profit you deserve. Instead, it will cause buyers to underestimate the value of the goods and even question the quality of your products.
(2) Product growth stage
When the seller's product has some foundation in sales volume, good reviews, star ratings and other indicators, and sales volume is on the rise, but the number of loyal fans is still small and it is in the growth stage, the seller can slightly increase the price. Or keep your price slightly lower than your competitors.
(3) Product maturity stage
When product sales have been very stable, ranking, traffic, star rating, sales and other indicators are very good, it has accumulated a lot of popularity in the market, and data from all aspects show that it is a hot product, then the product represents the brand image and store positioning more, and the seller can set the price higher than the market price.
(4) Product decline period
After a product has become popular in the market, it will slowly enter a period of decline. Consumer loyalty will also decline, market demand will gradually weaken, sales and profits will be much lower than before, so there is no need for sellers to continue to push this product. If there is still stock, you can clear it out. Such as discounts, free shipping, etc.
2. Pricing strategy
(1) Make good use of the number “9”
On major e-commerce platforms, many product prices end with "9". This trick has been repeatedly used by merchants because it is indeed effective.
A one cent difference between 10 and 9.99 will certainly not make a difference, but the same one cent difference between 10.00 and 9.99 dollars will make a huge difference.
(2) Adjust prices based on market demand
The product price should always analyze the market dynamics and determine the price trend according to market changes. Otherwise, the market has changed, and you are still insisting on your own price. In that case, it is tantamount to issuing a ban order to yourself, and all sales will go to other sellers' stores.
(3) Learn how to adjust prices during festivals
During the holiday promotion season, sellers launch different promotional products according to different festivals. The prices can be appropriately lowered in order to attract some loyal fans and improve the rankings, so that Amazon will pay attention to your store, which will be of great help to you in the future.
(4) Using the Amazon calculator
Of course, as an Amazon seller, the products you choose are basically all available on Amazon, so you can calculate the profit based on the Amazon calculator to help determine the appropriateness of the price.
Generally speaking, Amazon sellers can follow the following pricing methods:
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
The last point that needs to be kept in mind is that pricing cannot change frequently, otherwise it will cause buyers to be disgusted and lose confidence in purchasing the product, which will not be worth the loss.
