82% of consumers see price as an important factor in buying products on Amazon. Price is the key factor affecting product selection and consumer participation. According to Amazon, you can put your product on the shelf at any price, regardless of Amazon’s price or price, as long as it is within the limits set by Amazon and your price meets the same requirements of the sales agreement.
For beginners, pricing is difficult to grasp, in addition to ensuring profits, but also need to ensure that the price is competitive. Today, I’d like to share with you Amazon’s pricing strategy. Sellers need to be familiar with various pricing strategies and know what prices are suitable for their products at different times.
For new sellers, the following fees and factors should be considered when setting the price:
This is one of the first things a seller should consider. The production cost of products includes raw materials, R & D, manufacturing, transportation and factory profit. If the seller improves or slightly innovates the product in order to ensure the quality, the cost will also increase. For non factory sellers, the cost is the daily purchase price.
If you sell products on Amazon platform in the name of professional sellers, in addition to paying monthly rent, Amazon will charge different percentage of commission according to different categories of products sold by sellers. This part of the cost, the seller is often included in the product pricing, and ultimately by the consumer to pay.
Market demand has a significant impact on product prices. When the market pursues a new product, resulting in the new product in short supply, then its price will rise accordingly. However, when the products are sold online and offline, the buyer’s choice is diversified, and the seller’s profit is diluted, which will also affect the price.
From the factory to the online sales, the transportation cost is not small, which will also affect the price of the product. If the seller chooses Amazon FBA to deliver goods, it will also generate FBA first journey transportation costs and FBA storage fees.
Different product brand positioning, price positioning is not the same. The price of the brand that follows the low-end market route of the product will be lower; that of the middle market will be moderate; that of the high-end market will be on the high side.
Amazon has a membership day in mid July, a “Black Friday” and a Christmas promotion in the second half of July. Whenever these holidays come, Amazon will adjust its price on a large scale to promote sales.
When setting a product price, don’t forget to check the competitor’s product price and its historical selling price. It is suggested that the price should not be too different from the competitors.
For Amazon sellers, you can refer to the following pricing formula when pricing:
Product price = product cost + platform commission + expected profit + others
FBA product price = product cost + platform commission + FBA first journey cost + FBA cost + expected profit + others
Amazon has an automatic pricing function in the background, and sellers can set pricing rules. In addition, there are many Amazon automatic pricing tools on the market, such as Wofei ERP system, which can also realize automatic pricing function. Sellers can decide whether to use automatic pricing tools according to their own needs.
Although we know the pricing formula, the pricing ideas are different in different stages.
When the seller’s product is just put on the shelf, there is no praise, no star rating, no loyal fans, and the product is in a state of no competitiveness. At this time, in order to make the product quickly enter the market, the seller may as well set the price lower. However, it should not be set too low. Instead, it will make the buyer underestimate the value of the goods and even suspect that you are selling fake goods.
When the seller’s products in the sales volume, praise, star score indicators have a certain improvement, sales in a stable rise, but loyal customers are still very few. At this time, the seller can raise the price a little. Or keep the price slightly lower than that of competitors.
When your product sales have been very stable, performance indicators are very good, accumulated a lot of popularity in the market, the performance has far exceeded the average seller, or has created a popular or quasi explosive product. Then, in this level of products, the price comparison function has been weakened, more is to represent the brand image and store positioning. Then the seller can safely adjust the price higher than the market price. Loyal buyers don’t leave because you raise the price.
Popular products can not always maintain a hot sales, when the product in the market after the fire, will slowly enter the recession period. More perfect new products will be introduced in the market, and the loyalty of consumers will also decline, and the demand will gradually weaken. The sales volume and profit will be much lower than before. Then, some discount sales promotion can be adopted at this time.
In short, sellers should keep in mind the following points when pricing
The price must be competitive, but not too low
Be sure to calculate all the costs
Always comply with Amazon’s pricing policy and avoid penalties