January 4, 2019 by Price-Fuel
Amazon made net sales of almost $178 billion last year.
Yep, that’s right: billion.
Amazon is the most successful e-retailer currently and this trend will surely continue. Amazon provides buyers will a hub to select the perfect product. They offer great shipping, and above all, great deals.
Customers always want to find the best deal. Amazon makes it’s much easier for customers to find it! Gone are the days where folks went from one store to the next wasting time and effort to find a good deal.
Since Amazon is such a competitive marketplace, as Amazon sellers we need to know how to price our products correctly. If we don’t, we risk falling into the ranking abyss where only the really motivated customers dare go. We’re talking like page 30 of the search results!
We all want our products and businesses to be successful. We all want to make our mark on the Amazon marketplace. With organic selling strategies and the right pricing strategy, we can begin the journey of making that happen.
Read on to learn tips for Amazon dynamic pricing strategies.
Amazon is filled with competition. While this can be intimidating, it’s also possible to beat out your competition with the right pricing strategy. Explore the following Amazon dynamic pricing strategies.
First and foremost, your SEO has to be on point. If your product descriptions are subpar, then your rankings will also suffer.
Your product descriptions need to be unique, detailed and include the correct keywords. Much like Google, Amazon also has an algorithm to rank the products it shows customers. Keywords/ key phrases, popularity, and engagement all affect where your product stands in the rankings.
If your keywords don’t accurately denote how your target audience would search for your product, then that will hurt your business. If you don’t include the keywords in the product name and description then your SEO also won’t work in your favor.
Make sure that your SEO is in good order before you consider lowering and raising your prices.
Not only do product descriptions need to enhance your SEO, but they also need to enhance your customer’s experience. Customers shopping online don’t have the chance to ask someone nearby specific questions about a product. They simply read product descriptions to get these questions answered.
If your product descriptions aren’t detailed enough then your pricing won’t matter. Customers will automatically feel like they are taking a risk by purchasing your product. Lack of detailed descriptions also communicates to your customers that you don’t value your product or else you would have taken the time to talk about its quality and features.
Little detail on product descriptions also leaves room for miscommunication. No customer wants to return an item from Amazon. It’s a hassle to take it to the post office!
It’s also will cost you!
Don’t leave room for miscommunication in your product descriptions.
Miscommunication increases the likelihood of bad reviews. Bad reviews lead to fewer sales. Fewer sales might mean that you have to lower your prices for customers to even give your product a thoughtful consideration.
Ideally, before you even put your product on Amazon, you need to check out your competition. Your successful competition is doing something right. Note the basics of their selling strategy and pricing.
You won’t necessarily know how much it costs to make their product, but you can get a good idea of how much people are willing to pay regardless. Read through their product descriptions as well. Most likely, they are telling customers upfront exactly what they’re getting and the price will reflect this value and clarity as well.
Everyone who sells a product needs to make a profit. It’s that simple.
You can’t expect to sell a product for less than what it takes to make it. You also can’t expect a customer to purchase a highly marked-up product instead of getting a similar product at a lesser price.
To find a baseline to make a profit start by calculating how much it costs to makes the product, pack it, and ship it. Many Amazon sellers forget to include their packing and shipping prices which hurts their business in the long run.
Remember to also include Amazon’s Commission, FBA fees if you’re a private label seller and other fees.
After these costs are gathered, consider what is the lowest profit you could make on the product and still keep your business successful. This will be the lowest amount you can sell your product for.
Then, check out your competition again. Take into account their prices, but don’t hesitate to go slightly beyond them to find your maximum product price. Usually, a markup of 15% to 20% will allow your items to stay on page one of the search rankings.
But before your mark-up your prices, objectively compare your competition’s products to your own. If you’re a private label seller, you’ll definitely need to justify pricing your products higher. Since your competition may invest in the same generic product, you must be absolutely certain that your branding, marketing, and customer service beats out your competition. Otherwise, your customer will see right through the markups and opt for your competition’s product.
Remember the customer wants quality, but they also want the best deal. When you market your product, you need a solid business plan which includes impeccable customer service, then it justifies a higher price.
Amazon dynamic pricing strategy is possible with the right tools and guidance. Pricing a product appropriately takes a lot of work, but it’s worth the effort when your business sees positive results.
An additional tool you can invest in to help with your Amazon private label pricing is our Repricing Software! PriceFuel automatically reprices your private label products on Amazon to maximize profits, boost market shares, and properly manage inventory. Sign up and take advantage of our free, fully-load 14-day trial!