3 Effective Ways to Optimize Your Amazon Pricing Strategy

AMZ Seller Financing   •   September 17, 2018

Amazon pricing strategy

In order to make profits from your sales, you need to make sure that you optimize your Amazon pricing strategy. 

The Amazon pricing strategy doesn’t depend on just one factor.

In fact, there are several factors that come into play. Therefore, in order to come up with a solid pricing strategy, you will have to keep an eye on a couple of things. 

How to Optimize Your Amazon Pricing Strategy

1. Know Your Own Costs and Fees

You cannot come up with a good price for your Amazon product(s) before you make sure that you know exactly what your own production costs are. So, take a moment to think about your online store. What kind of niche are you in? Are you a manufacturer (you make your own products) or a retailer (you sell other people’s products)? There is a big difference between the two, and it definitely affects the Amazon pricing strategy.

Think about how much you spend on getting the “raw materials” for your products, if you’re a manufacturer. You need to calculate exactly what the production cost per product is so that you can make an accurate calculation of the end price. There are many pricing tools you can find online and many of them come with a free trial period. We advise you to find a pricing tool you like and put it to good use. It will make online selling so much easier for you. And, in case you want to learn more, here are some other tools you can use to grow your Amazon business.

If you’re a retailer, think about all the costs you have. How much are you paying your supplier? Is it a fixed price or does it often change? This will help you to know exactly where you are and what to do. So many online sellers make the mistake of starting with the finished product. Remember, in order to optimize your Amazon pricing strategy, you need to start with the production cost of the product. In other words, think about not how much you can earn per item sold, but how much it will cost your business per item sold

And finally, there are the Amazon fees that need to be calculated. You can learn more about the topic here. Once you calculate your own costs per item sold + Amazon fees, add a net profit margin and you will have a price for the product you want to sell.

2. Track Your Biggest Competitors

You need to keep track of what your biggest competitors are doing. This will enable you to put optimal prices on your products and generate more sales. There is no need to track all of the sellers in your product category. After all, you wouldn’t be able to do this, because there are so many sellers out there. For every products category, there are thousands of sellers, and you would need weeks (or even months!) to track down every one of them and analyze their prices. Furthermore, there are so many new sellers coming to Amazon every day, which makes the search even harder.

However, the good news is that you don’t have to keep an eye on all of them, just those that are considered top sellers. Finding top sellers per product category is much easier and less time-consuming. And they will be the ones that your potential buyers will be more likely to come across. 

You don’t have to price your products against the whole of Amazon, just against your top competitors.

3. Make Use of Seasonality (an Ace up Your Sleeve)

Many Amazon sellers tend to forget (or ignore) the importance of seasonality in Amazon selling. Your prices don’t have to be fixed. In fact, it’s good to change your prices and optimize your Amazon pricing strategy as time passes. Remember, there’s no such thing as the perfect business or the perfect strategy – it’s all work in progress.

Like in all other marketplaces, Amazon sales are not the same every day. There are significant changes on a weekly, monthly and even yearly level. And you need to know when you’re selling, and what you’re selling during a given time frame. For example, discounts are always great when it comes to the holiday season. Usually, the period between October and January is considered the best when it comes to Amazon sales. Your Amazon pricing strategy has to be linked to your selling strategy and “follow the trends”.

You can also include special discounts, for Mother’s Day, Valentine’s Day, Halloween, and other special occasions. By tracking these “discount periods” and adjusting your prices according to them, you will have a much better chance of generating high sales, because customers love shopping during discount periods.

Feel free to check out the other articles on our blog as well as download our FREE ebook on how you can fund your Amazon business.