December 19, 2018 by Price-Fuel
Almost 20 percent of professional merchants on Amazon exceeded $1 million last year. If you want to join their ranks, or even just increase your revenue, you need to increase profit.
One of the keys to increasing profit is knowing the right times to make changes to your prices. Changing an Amazon price at the right time means you can maximize profit on an in-demand item.
The inverse is also true. If you raise the price at the wrong time, you may not make the sale, resulting in lost profit.
Raising prices on Amazon often seems like a gamble. How do you know when the time is right?
This guide is designed to help you take the guesswork out of the price change game. Follow the tips included here, and you’ll soon have a sixth sense about when the time is right.
Customers go to Amazon looking for bargains. As this is the case, the seller with the lowest price often wins the customer’s business.
This mentality creates a race to the bottom. As competition increases, sellers revise their prices downward. The end result is the price goes so low no one can turn a profit.
This scenario is one of the most common fears expressed by Amazon merchants. Competition has climbed over the past few years, creating intense price wars. If the price drops below a particular threshold, though, no one truly wins.
This is why it’s important for Amazon merchants to set minimum and maximum prices for products. It’s also why you should consider raising your prices from time to time.
If every other seller is engaged in a race to the bottom, how does raising your list price help you? You might worry you’ll lose the sale. Pressure to keep prices moving downward can be intense for sellers.
Raising your prices actually helps foster healthy competition in the Amazon marketplace. Provided you raise your prices at the right time, other sellers will likely follow suit. This can help correct the downward momentum of prices.
It can also give you an advantage. If your competition raises their prices, you can respond by lowering your prices. Keep in mind you won’t need to come down to historic lows either.
This ebb and flow of prices keeps sellers from dropping below the profit line. In turn, competition stays healthy.
Now the question is, “When is the right time to raise Amazon prices?”
The first thing you should do is consider the sales history of your product. If your product has a stable sales history, it should also have stable visibility on the marketplace. This visibility allows the product to better resist wrong pricing decisions.
Another thing you’ll want to do is to double-check your reviews. Take a moment and compare your review average to your competition. If your review average is higher, shoppers are more likely to accept a higher price because you’re trusted and liked.
The final key to increasing your prices at the right time is to take it slow. You don’t need to jump your price from one benchmark to another immediately.
Small steps are better. Increase the price, then wait three to seven days before increasing it again. This incremental approach will help you find the right price point.
If you’re looking for the right time to make Amazon price changes, another optimal point is when you have the Buy Box.
Most merchants are aware of how vital the Buy Box is. The majority of Amazon’s sales go through this feature. If you have the box, you’re going to win the largest percentage of sales for this particular item.
Amazon rotates the box, using an algorithm to determine the best value. Most of the time, the lowest price doesn’t win the Buy Box.
If you already have the Buy Box, you may be able to push your price a little higher. You should keep the box even with a higher price since you’re still providing great value to Amazon’s customers.
You might wonder what you should do in the middle of a price war. These are often initiated by new sellers eager to gain sales. Other sellers will sometimes end up embroiled in the race to the bottom.
While you may be tempted to enter the fray, it’s best to wait it out. The new seller will move their stock, leaving buyers searching for another alternative. Your higher, more profitable price may be the best deal on the market.
This also helps to even out price drops and keeps competition in the marketplace healthy.
Most professional merchants have hundreds or even thousands of listings on Amazon. The thought of tracking prices and updating them each time you want to increase them is enough to make you shudder.
The best thing any Amazon merchant can do is invest in an Amazon price tracker app. The app will automatically keep tabs on prices. When it’s connected to the right software, you can even automate price increases.
In fact, this is what many of the most successful Amazon merchants are already doing. Automated price increases can be timed to coincide with those slow hours.
The software can analyze data about order volumes and marketplace prices. It can then make decisions about when and how to reprice your listings.
With the right software, following a repricing strategy is easier than ever.
If you’ve been pondering your pricing strategy, now’s the time to put a new plan into action. With these tips, you can raise your prices at the right times to maximize sales and profits. New software can help take the guesswork out of when to raise prices.
Raising your Amazon price is just one way to increase your profits. Check out our blog for additional tips and tricks to grow your Amazon business.