Pricing, shopping cart and marketing are indispensable, and each aspect requires independent thinking. Next, organize your thoughts.
1. How to price Amazon products
Before solving this problem, we must first understand what factors will affect pricing on Amazon, that is, what factors should be used to price our products? aspects to consider.
1. What aspects will affect pricing
The pricing of products on Amazon is affected by many aspects. All factors are listed here for your reference.
1. 1Amazon commission
No doubt. On the Amazon platform, sellers cannot avoid the 8% to 15% commission for each category. Therefore, when setting prices, Amazon’s commission must be taken into account as soon as possible. This is the most stable expense and will not change once the category date is selected.
1.2 Product Cost
This cost is divided into two directions, namely the dealer direction and the factory direction. For dealers, the cost of the product = procurement cost + domestic logistics cost. Such calculations are very simple and straightforward. For factories, the cost calculation method is more complicated. Product cost – raw material procurement cost + personnel cost + research and development costs + mold costs + various transportation costs + product upgrade and replacement research and development costs + manufacturing costs +factory profit.
The cost of a product may involve much more than what is listed above, so whether you are a dealer or a manufacturer, the cost of the product itself is something that needs to be seriously considered.
(1) Cross-border freight. Whether you are a self-shipping seller or an FBA seller, you need to ship. Therefore, the freight for this period needs to be calculated and included in the seller’s cost.
(2) Marketing and promotion fees. Operating on Amazon will inevitably involve some marketing and promotion plans, so funds will inevitably be involved, otherwise it will be empty talk. When setting prices in the early stage, marketing and promotion expenses must be calculated in advance into the product selling price. Otherwise, when advertising, there will be no budget.
(3) Expected profit. There is no doubt about this. What we look forward to most when selling things is nothing more than profit, so the expected profit must be calculated in advance, otherwise we will be working for suppliers, logistics providers, and Amazon, which is obviously not the result we want.
(4) Market supply and demand. The selling price of a product is bound to be affected by market supply and demand. When supply exceeds demand, the price needs to be reduced. When supply exceeds demand, the price can be increased appropriately. Therefore, when a seller launches a new product, he must clearly understand the supply and demand situation of this product in the market. If one day’s negligence leads to the pricing deviating from the market, customers will not buy it.
(5) Competitor prices. When selling things on Amazon, everyone’s products are sold together, so sellers need to understand that competitors sell products of the same grade at a lower price. We cannot blindly increase prices, and of course we cannot belittle ourselves. It is not advisable to set prices regardless of the pricing situation of our competitors. However, don’t blindly copy your competitors’ prices. After considering your own profits, your competitors’ prices are just a reference value.
(6) Brand positioning. The brand positioning of a product is very important. If the same sentence is affixed with different trademarks, the price will be very different. Therefore, the brand positioning of a product determines the sales price of the product. However, this brand positioning also determines the product services and corresponding quality. If it’s just a street stall product with ordinary packaging, it won’t be able to sell for the same price as the counter product.
Therefore, sellers cannot be clear about brand positioning. What kind of brand is positioned depends on what kind of packaging, products, and services are provided to customers. Otherwise, if customers spend more money than other products but cannot buy the corresponding products and services, customers will definitely cause trouble for you. Therefore, before pricing, be sure to clarify your brand positioning, because other pricing factors are fixed, and only brand positioning is a key point that can truly stand out, and may even become an eternal support point for profits.
(7)FBA fees. If you do FBA, this expense is indispensable. There is a calculator on FBA fees in the Amazon backend. Sellers can easily calculate how much Amazon will charge and include it when calculating the selling price of the product.
(8) Customer service costs. This does not refer to the salary you pay to customer service, but the expenses incurred when returning or exchanging goods. The specific amount or quantity here cannot be set with a fixed value, but it must be reserved and must be real-time based on the actual situation. Make adjustments.
(9) Operating costs. This means that the costs required by the seller’s own operations must also be included in the selling price of the product.
The above listed are most of the factors that sellers need to consider when setting prices on Amazon. Why do you say the vast majority? Because this company will also consider other unpredictable costs in the pricing process, such as capital turnover, goods clearance, etc. We have not included these unconventional factors. If you want to use them, you can add them yourself.
2. What price do consumers prefer?
Many sellers set prices just to achieve the lowest price in the category and to grab traffic. But on Amazon, that’s not the case at all.
Customers buy things on Amazon mostly based on their trust in Amazon, so when buying things, they need some products with stable quality. In other words, customers may not simply choose some low-priced products. For categories such as jewelry, watches, and cosmetics, customers are afraid to place orders for very low-priced products because they are worried about quality. Some products are moderately priced and attractive. Products that appear to be guaranteed are more popular among customers.
Just imagine, a product that has just been put on the shelves has a very low price and is put on the shelves in a new store. Many customers are actually afraid to place an order. On the contrary, those products that have been on the shelves for a period of time, have a large number of reviews, good ratings, and good reputation, are more likely to be favored by customers, because these factors mean that the product has been tested by customers, and customers will feel reassured even if they spend more money.
Therefore, when setting prices on Amazon, you must not blindly set low prices. This will be detrimental to the seller’s product profits and later brand building.
3. How to view low prices
Of course, we are not completely denying low prices. Low prices mean that customers can enjoy higher cost performance, which is what Amazon has always pursued. s things. After all, as a customer, price is always an important purchasing factor.
For example, in a luggage product, customers may not only pursue quality, reputation, and ratings, but also consider their own Affordability. When the price of a product exceeds what they can afford, customers will also look at the prices of similar or even identical products in other stores. When you find the same product at a relatively low price, you will inevitably place an order at a low-price store. If we don’t price appropriately, we’ll miss out on this order.
Therefore, low prices cannot be set, nor can they be set casually. Sellers need to understand when they can set a low price.
When pursuing short-term profits. This type of seller generally only pursues short-term sales and does not intend to operate the store for a long time. So the price may be set very low, even lower than the market price.
When the product has just been launched and activities are being held to attract traffic. If you do activities to attract traffic when the product is first launched, you need to increase the conversion rate of the product at a low price, thereby improving the sales performance of the product.
When there are very good marketing resources. If a seller has very good marketing resources, can spread the marketing costs very thin, and can attract a large amount of traffic to purchase in a short period of time, in this case, it can also be low-priced. After all, it is possible to make small profits but quick turnover.
When the product cost and purchase price of goods are very low, and the product quality is good. Such sellers can save costs in terms of supply and customer service, so they can also set prices lower than the market price.