The price of products on Amazon has a great impact on buyers’ purchasing decisions. Everyone likes relatively cheap products. Let’s take a look at the factors affecting Amazon’s product pricing and pricing formula.
1. Factors affecting product pricing
1) Different commissions are charged according to different categories, and the normal commission range is 8% – 17%;
2) Product packaging material cost: Since the seller is a distributor or a factory, the product cost will be different; the product cost of distributors mainly includes procurement costs and domestic logistics costs; the product cost of factory sellers includes raw materials, research and development, production, labor, etc. In addition, the packaging cost of the product should also be calculated.
3) Freight and sales location: Choose: FBA delivery, self-delivery, overseas warehouse delivery and other logistics costs are different. (European sellers also need to consider VAT)
4) Expected profit: For profit margins, the minimum is 30% profit expectation;
5) Competitors’ prices, although competitors’ prices cannot be copied when pricing, competitors’ prices can be used as a reference for pricing and price adjustment;
6) Marketing promotion: When the promotion festival comes, Amazon will adjust prices on a large scale. If the product wants to be promoted inside or outside the site, corresponding promotion costs will also be incurred; the seller also needs to consider this part of the cost before setting the price.
2. Pricing reference formula
FBM product price = product cost + platform commission + warehousing and logistics fee self-delivery + expected profit + other
FBA product price = product cost + platform commission + FBA first-mile fee + FBA fee + expected profit + other
3. Product pricing tips
1) The role of the number 9
9.9 or 19.9 is also attractive to foreign consumers, and sellers should make full use of consumer psychology.
2) Differential pricing
Show prices of products with similar functions in the same series together, and try to launch high-priced products to influence low-priced products. Through hierarchical pricing, product price differences, stimulate sales.
3) Consumables pricing method
For example, razors, the knife holder is cheap, but the blades are expensive; printers, the machine is very convenient, but the consumables are expensive. The reason for this pricing is to make money through the consumables of the product. This pricing strategy can also be used in areas such as air purifiers, water purifiers, capsule coffee machines, etc. that require continuous purchase of consumables.