Pricing Strategies on Amazon



The goal of every Amazon seller is to make as many sales as possible. There are numerous aspects that influence a customer's choice to buy your product: where your products rank among keyword search results, your review count and rating, whether your listing includes high-quality photographs and informative writing, shipment speed, and, of course, the price.


Ultimately, in most cases it always comes down to the price of a product that influences a consumer’s decision the most. Therefore, having the right pricing strategy is key. Our blog this week covers the various pricing strategies for Amazon sellers.

Pricing on Amazon is very competitive. 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. Amazon's pricing strategy aims to keep prices as low as possible for buyers. This means that product prices can fluctuate often, perhaps within a single day. Maintaining low prices encourages consumer loyalty, which benefits Amazon as sellers compete for the Buy Box. As a merchant, fighting for the Buy Box is a massive part of success when using Amazon for selling. But even if you don’t always have the Buy Box, there is a silver lining. Outside of the Buy Box, products are placed by product price combined with shipping price. This means being a cheaper merchant can still get you noticed sometimes.

Pricing Strategies


There are 4 main types of strategy when it comes to pricing on Amazon.


Economy

The economy strategy focuses on low advertising expenditures and minimal profit margins. Its goal is to make the product widely available and to sell in large volumes. It will rely on low sale prices to make the product look attractable to the consumers and will usually have little to no shipping expenses. This is a good method for goods that are used every day, like detergents.


Premium

Premium strategy is the polar opposite of economy strategy. It is usually expensive and frequently uses a brand name to attract additional attention. Because brand names have less of an influence on Amazon, individuals utilising a premium strategy will frequently use high-end product discounts to stimulate attention. This method works well for well-known brands in their field, such as Gillette or Lynx/Axe.


Skimming

The skimming technique offers a flexible approach to pricing. An Amazon seller might use this method to start with a higher price until the competition matches it. To remain competitive, the price would be reduced at that point. This method is good for merchants who have a distinctive product but expect to face competition in the future. This is due to the strategy's goal of maximising profits in the short term before the competition catches up.


Penetration

When you use a penetration strategy, you cut your prices to obtain market share. New brands or existing brands offering new items frequently adopt this strategy. Most of the time, this takes the shape of a promotion, with pricing rising as goals are met. In the long run, this method is unprofitable. However, it may be beneficial in the near term to obtain the Buy Box and then develop interest in your specific product through brand loyalty.

The above is a broad overview of pricing strategies that sellers can adopt. Do let us know your thoughts on which pricing strategy works well for you. For more info on how to be profitable and successful business on Amazon, please contact info@unicornorange.com.

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