First consider the fees and costs:
Before thinking about the final price of a product, you must consider all the costs along the way. From manufacturing to shipping to inventory to marketing, online retail has many costs you need to consider when setting prices.
You should remember that when you enter the realm of Amazon, you have to deal with the dreaded marketplace fees. The fees can vary significantly from one product to the next, which is why you need to do proper research prior to listing your product.
It might all sound basic, but adding up all the costs and double checking that you will be earning a tidy profit is something all online retailers need to do before they add a new product. If you would like to know what the costs are likely to be for your business, you can use the free estimator by Whitebox that shows you just how much you can expect everything to cost.
Price according to the brand:
Just as ranchers brand cattle before allowing them to graze, it is important to consider branding before selling your products. You need to follow some general rules, depending on whether you are selling a premium brand or a low-cost leader.
Low-cost leader products are typically straightforward – depending more on knowledge of other products as well as changeable pricing. You should also consider adhering to the .99 cent rule to ensure that your products seem as low cost as possible.
When it comes to premium products, it is important to build a sense of quality, which could mean going for more consistent albeit slightly higher prices. You should consider setting up a minimum advertised price policy (MAP) to maintain a certain threshold in pricing while protecting your brand image. Instead of setting a price such as 99.99, which indicates a low-cost item, set your price at whole figures such as 100.
Keep It Flexible:
It would be nice to say that you are now done after you set that initial price, but it might not be realistic. Flexibility is key, since the market is constantly changing. Don’t forget that you should never advertise a set price unless when selling a premium product, since in all likelihood, this will probably change often.
Some Amazon sellers prefer using auto pricing. Auto pricing is quite simple: It allows for price changes in response to other seller’s changes. It can be an excellent option for retailers that sell products with a lot of competition. It can be particularly important when it comes to holding onto the sneaky buy box, so that you never miss out on sales.
Drive customers back to your site:
Keep in mind that the idea is always to encourage customers to make purchases from your website. Without the massive fees from third party marketplaces, you can earn a higher profit. The easiest way to do thus is making sure that you set Amazon prices at least slightly higher than on your website. You should also consider adding promotions only available on your website.
Follow the $10 Law:
If you are selling on Amazon and using FBA, $10 is the magic figure. If your products fall either below or above this number the rules usually change.
Keeping products affordable and still turning a profit and can be tricky for products less than $10 due to Amazon’s minimum fulfillment fees. It means that items priced lower will generally have less margin due to the fixed fees. For instance, a product selling for $5 on your website might have to jump to $11 if you want to earn a profit. Items above $10 are more likely to absorb the fixed fulfillment fees as long as they have a decent profit percentage.
Don’t despair if you have a lower price item since there are innovative ways to make it work. Strategies such as multipacks can help you move closer to the more profitable $10+ territory. In addition, if you have strong profit margins for the product, you are good to go.
Never forget about customer feedback:
Even if you adhere to all the pricing rules, never forget that it is impossible to get anywhere on Amazon if you don’t have excellent seller and product ratings. Just think about how you actually make choices when you buy items on Amazon – are you likely to pay as much attention to the price when it has a rating of just 2 stars? Do you typically buy from sellers with a feedback of below 90 percent? Probably not. If you want that buy box, you must first have great seller feedback and set the right price.