By selling on Amazon, you are entering a market that is extremely competitive, and when consumers have so many options, the difference in only a couple of cents can determine whether they purchase from you or your competitors. To overcome this, your pricing strategies must be methodical and on-point. Here are our top 5 favorite pricing strategies you should try in 2018.
Avoid Being the Cheapest Seller…
Although it might seem logical that if you are offering the lowest price, people will buy from you exclusively. Instead, if you set your prices at the lowest too often, consumers might begin to associate your business and products with cheap quality rather than being competitively affordable options, resulting in a race to the bottom.
We recommend that if sellers want to go the “competitively affordable” route, you should instead price your products at around 1.5% more expensive than the cheapest seller. You’ll avoid the race to the bottom, but you’ll also remain competitive.
…But If Items Won’t Sell, It’s Time to Discount
If after a few months of the first strategy you notice that a portion of your inventory still won’t sell, it might be time to slash prices. This aggressive pricing strategy is best utilized when you want to make a quick sale or clear some inventory space. Try to match your competition but don’t go below their prices. Otherwise, you’ll enter the dreaded race to the bottom.
Harness the Power of Automation
If you’re still relying on manual repricing for your entire product line, you should consider investing in an automatic repricing platform. They are incredibly simple to use, and with your set rules, your items will be automatically repriced at all hours of the day, regardless if you are online. This ends up saving precious time, headaches, and money in the long run and is well worth the initial investment and time to set up the program.
Follow Your Intuition
You started an Amazon store because you have some experience and knowledge related to business. Don’t let this experience fall by the wayside! Even if using an automated repricer tool, you shouldn’t rely on the software entirely to run your store. Software can’t predict competitor trends, use past information to make future decisions, or determine which products are in need of a quick sale and which ones just need a small boost. There should always be some sort of human touch behind your pricing strategies.
Keep the Principle of Supply and Demand in Mind
The principle of supply and demand is one of the cornerstones of conducting business, and it is ever-present in the Amazon marketplace. If there are more items than there are buyers, then shoppers will be pickier about the prices of items. On the other hand, if the items are rare and the demand is high, you won’t need to worry about lowering your prices. In fact, we’d recommend upping the price a tad so you can get more profit off of each sale.
There are many more strategies for selling on Amazon in addition to pricing strategies. These five are the most important in our opinion and heading into 2018, every seller on Amazon with hopes to remain competitive should follow them for better chances of success.