Although Amazon’s customers are not very sensitive to product prices, it does not mean that sellers do not need to pay attention to prices. The key to follow-selling is price, and price sometimes determines who will get the shopping cart. Sellers should always pay attention to price changes and set prices suitable for product sales at different times to maximize order profits.
1. Reasonable price adjustment
When a product is newly listed, considering that the new listing has no customer accumulation and review accumulation, it is difficult to compete with sellers with a large number of reviews, so sellers can make slight adjustments to the price to accumulate some advantages. For example, sellers can set the product price lower than the average market price. For example, for products priced below $50, the price can be set 3 to 5 dollars lower than the average price, and products above $50 can be appropriately lowered (for reference only). If the product itself is unique and relatively novel in function and appearance, the price can be at the normal price or higher than the average price, and it is not necessary to reduce the price.
When the product enters the mature stage and has stable orders, sellers can raise the price. Of course, pricing and price adjustment also depend on the overall trend of the platform. For example, in the peak season, many sellers on Amazon will do promotional activities by lowering product prices. At this time, sellers should also appropriately lower prices according to market conditions to grab more customer traffic. However, when the cost of raw materials of products in the market increases, the seller’s price should also be adjusted accordingly to ensure profits.
2. Product Pricing Formula Reference
What costs should be considered when pricing products? The following pricing formula is for your reference.
FBM selling price = (product cost + logistics cost + promotion cost + other costs) x (1 + profit) / (1 minus commission)
FBA selling price = (product cost + FBA first-mile cost + FBA fee + promotion cost + other) x (1 + profit) / (1 minus commission)
Platform commission: varies depending on the product category, generally 8%~15%, the specific commission can be viewed on the Amazon backend help page.
Other costs: returns, storage fees, labor costs, etc.
In short, only by keeping up with the market and the platform’s trends can profits be maximized.