For consumers on the platform, good quality and low price are the primary principles of shopping. Low price does not mean pursuing endless low prices, but a reasonable price that meets their psychological expectations. Moreover, Amazon sellers are prohibited from engaging in malicious market disruptions such as “price wars”. At the same time, according to the latest A10 algorithm, low product prices do not necessarily lead to more traffic and conversions, so sellers cannot arbitrarily reduce the price of listings, but should make appropriate pricing strategies in advance to maximize profits while meeting market demand.
How to set prices
1. Reference market
Based on past experience, using the average price and sales data of lifestyle products to analyze, generally speaking, pricing below $25 is a low-end volume range; pricing between $25 and $50 is a mid-range range; pricing above $50 is a high-end range. The above ranges refer to the consumption level of users. The higher the level, the higher the psychological expectations of target customers, and the higher the profits, but the sales volume may not be as good as the low-priced range. The actual situation is that the above range will be dynamically adjusted according to different categories. For example, for 3C products, a unit price of $400 may belong to the low-end range, while a unit price of $10,000 may belong to the high-end range. From this, it can be seen that although sellers have the right to set prices for listings, whether the prices are set correctly is still determined by the market. Therefore, in addition to the cost accounting of their own products, it is also necessary to focus on the price dynamics of the target market.
For example, when referring to the market average price, I will use data software such as ZonGURU to analyze the category average price of the target market. During this period, I will filter the target products and eliminate non-direct competitors to make the market average price more accurate.
Next, I will select TOP sellers for data analysis, check the trend of price and sales volume changes, and understand the elastic demand index of similar products. From this, I can make the corresponding ranking of my own products and the adjustment range of sales volume and price.
2. Price matrix
Faced with a wide range of products, many consumers will search according to price and make the concept of “you get what you pay for” as a purchasing decision. From the seller’s perspective, we can adopt a multi-variant price matrix to target this characteristic of consumers.
There are two advantages to doing this. First, given consumers’ daily shopping habits of comparing prices, we can guide customers to make choices within the Listing’s variants. The difference in price will naturally allow consumers to associate the differences between the variants, and in the end they may convince themselves to choose one of them, or they may leave after comparing prices. Regardless of the outcome, we have achieved goal one – to keep users on the Listing page as long as possible. Second, in the current situation of fierce competition in the category, lowering prices is often a common practice for many sellers. With a price matrix, we can position and divide our own products against target competitors, and use price gradients to achieve precise strikes.