Pricing is very competitive on Amazon. Not only does this affect the chances of winning the Buy Box, it is also one of the main contributing factors to a customer’s ultimate decision as to whether they ought to purchase from you or another seller.
The logic should be: if sales are high then the prices get raised, if sales are low then the prices get lowered. Unfortunately, things are not as simple as that.
Amazon’s algorithm is very complex and cutting your margins through price reductions doesn’t always improve your position on Amazon. That is why it is paramount to understand the various differences in pricing and the various pricing strategies.
There are two types of prices on Amazon, that any seller must be familiar with:
Item price – this is the cost of a product only. This is the price customers will see minus shipping costs and any other factors that may affect the total price.
Total price or landed price is the price with everything included – this is what the customer, should they buy, pays. The following are included in the total price:
- Shipping and handling charges;
- Discounts, rebates, or special sales/promotions you offer/make with respect to purchases;
- Shipping method;
- Business practices, such as any reduction or elimination of shipping charges on an order, or of any other order-related fees and expenses;
- Low-price guarantees.
Note: If you find your product is in the ‘Other Sellers on Amazon’ section (where you don’t have the Buy Box yourself) you ought to bear in mind Amazon lists products based on product price AND shipping price.
Many sellers choose to undercut their competition, usually by $00.01 or £00.01 in order to earn a better place in the marketplace. Undercutting the competitors is called ‘repricing’ and it can be done via:
Manual Repricing: As a seller, you can choose to reprice yourself. This involves changing the price manually through Amazon Seller Central – or via other sites should you be managing your products this way.
This will only work for sellers with a few products, as it is time consuming, but gives you a clearer understanding of both you and your competitor’s products and pricing.
Repricing tools: To help with the competitive nature of pricing, repricing tools like Xsellco, RepricerExpress, RepriceIt and Appeagle can be used to automatically undercut competitors on the same listing. You can set a minimum price so the system doesn’t go below this selling price otherwise you could sell the product at a loss.