How To Find Right Pricing To Sell On Amazon? - PricingScan

How To Find Right Pricing To Sell On Amazon? We are at the fourth step of “How To Sell On Amazon In Seven Key Steps?

Amazon pricing

Pricing on Amazon is very competitive. Not only does this affect the chances of winning the Buy Box, it is also one of the main contributing factors to a customer’s ultimate decision as to whether they ought to purchase from you or another seller. So let’s take a look at the challenges of competitively pricing your products on Amazon.

How To Find Right Pricing

How do you price items on Amazon?

Competitively pricing items on Amazon isn’t as simple as it seems. The logic on many marketplaces is: if sales are high then the prices get raised, if sales are low then the prices get lowered. However, Amazon’s algorithm is very complex and cutting your margins through price reductions doesn’t always improve your position on the platform. That is why it is paramount to understand the various differences in pricing and the various pricing strategies.

There are two types of prices on Amazon that any seller must be familiar with, these are the item price and the total price. Item price is the cost of a product only. This is the price customers will see minus shipping costs and any other factors that may affect the total price. Total price or landed price is the price with everything included – this is what the customer pays at the end of the purchasing process. The following are included in the total price:

  • Shipping and handling charges
  • Discounts, rebates, or special sales/promotions
  • Shipping method
  • Business practices, such as any reduction or elimination of shipping charges on an order, or of any other order-related fees and expenses
  • Low-price guarantees

If you find your product is in the ‘Other Sellers on Amazon’ section (where you don’t have the Buy Box yourself) you ought to bear in mind Amazon lists products based on product price AND shipping price.

How To Find Right Pricing

After taking all this into account, you can see why a simple price reduction doesn’t always improve your position. Competitively pricing items on Amazon is no easy task. You should always try to take all the above factors into consideration when listing or repricing an item on the platform. A slight change to anything from shipping charges to discounts can make a substantial change to your product’s Amazon rank.

 

What is Amazon’s pricing model?

Amazon’s pricing model is based around keeping prices as low as possible for the buyer. This means the prices of products can change numerous times, even during a single day. Keeping prices low drives loyalty within their customer ranks, and ultimately results in Amazon benefitting from merchants competing for the Buy Box.

Amazon’s pricing model also takes things one step further using convenience. We all see the convenience of buying online. But when you have so many merchants competing to be a top seller for just one product, you always have a depth of easy choice for customers, that almost never runs out of stock. This again drives loyalty, increases sales and keeps both merchants and customers coming back for faster rolling profits and purchases.

 

As a merchant, fighting for the Buy Box is a massive part of success when using Amazon for selling. But even if you don’t always have the Buy Box, there is a silver lining. Outside of the Buy Box, products are placed by product price combined with shipping price. This means being a cheaper merchant can still get you noticed sometimes.

What are pricing tactics?

With Amazon, the objective is to gain the most reputable and effective position to generate sales, which is the Buy Box.

Amazon vendors are required to use various tactics to gain top spot and generate those sales. Many choose to adjust price through discounts, whilst others change their shipping costs or type.

To conclude, How To Find Right Pricing To Sell On Amazon? is an introduction to pricing strategy. We will accurate Which tool use to apply this strategy in next article.

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Charles Cortinas

Charles Cortinas is Full Stack Engineer at PricingScan. His philosophy: “Accept responsibility for your life. Know that it is you who will get you where you want to go, no one else." – Les Brown

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