The Two Primary Pricing Strategies I Use When Selling on Amazon

March 23rd, 2015

Everyone has their favorite Amazon pricing strategy, but in today’s post I will be going over the two main pricing strategies that I use for the items that I sell on amazon.  This post will cover the strategies that I use for the majority of the items that I sell on amazon, but there are going to be one off instances where these are not used. This post I wrote last year about how to price items on Amazon when selling via Amazon FBA covers a couple of specific examples of how I price items when amazon is a seller.

The Amazon pricing strategies that I am outlining in this post can be applied whether you are using a repricer or whether you are doing all of your repricing manually.  Personally, I am using a repricer as it allows me to set the prices of items once, and then the repricer will do the rest.  If you want to see the repricer I am using, you can find it on my resources page, but the point of this post is to share my strategies and not be promotional.

The first Amazon pricing strategy that I will share is my default pricing / repricing strategy.  This is what I estimate I use on 70-75% of my inventory.  The basics of this strategy are that I set my price based on the other FBA sellers on a product detail page.  I then set my price 1.5% ABOVE the lowest FBA seller.  I have found that pricing at this level above the competition will allow me to obtain buy box rotation, and also avoids prices spiraling downward as sellers continually adjust their prices to be the lowest.   Another fairly obvious benefit is that I will be selling my item for a higher price than if I am pricing at or below the competition.  My goal is to maximize the value I receive for every item, and this strategy helps me to do that.

Here’s a quick example to illustrate this point further.  If I was to sell on this KDC200 Bluetooth Scanner Amazon Detail Page I can see that the current low FBA seller is price at $248.88 at the time of this writing.  I would set my price at $252.61, which is 1.5% above the low FBA seller.

My default strategy is really as simple as pricing 1.5% above the lowest FBA competition.  I use this on the majority of items, and it works well for me, and sales keep rolling in despite me not being the lowest price.  I price items this way when I initially list them on amazon, and set up these rules with my repricer on the majority of items as well.  This often leads to items selling for quite a bit more than I initially listed them for.

My second Amazon pricing strategy, which I use on around 20% of my items, is to match the current low FBA competition.  Some of the main reasons that I use this strategy include: items have been on the default strategy for 2 to 3 months and haven’t been selling, I have a consistent supply of the item, or the window to sell the item is shorter than usual.

To elaborate on these points, I generally don’t like items to sit in my inventory for more than 3 months, so if this is happening I will begin to move to a my second Amazon pricing strategy.  If I have a consistent supply of the item from a wholesale source or a retail store, I will often use this strategy as well.  The reason for this is that I find I generally get at least a few more sales when I am matching the low price versus being 1.5% above the low.  With that said, I do test to see which strategy will make the most sense on replenishable items, but I generally find I get at least a few more sales when I am matching the low.  If the window to sell an item is short due to an upcoming holiday, an expiration date approaching, or any other time restriction, I look to move items to this matching strategy as well to give myself a better chance of making a sale in time.

Here’s an example of an item I would use this strategy on.  Amazon doesn’t allow “meltable” items in their fulfillment warehouses after April 30th, so if I bough a meltable item to resell now, or had some left in inventory, I would start looking to move them quickly.  This M&Ms listing would be a good example, if I had them in my inventory, I would most likely look to match the low FBA price to try to make a quick sale so I don’t have to get the item sent back to me.

That’s the “matching” pricing strategy that I use in a nutshell.  It’s really as simple as matching the low FBA competition.

The default strategy is my preferred Amazon seller pricing strategy as it avoids the “race to the bottom” altogether, and keeps me above the low prices.  With the matching strategy, you only run into trouble if you have a seller than continually undercuts you, and you continue to follow them lower and lower.  This matters more with a repricer than if you are manually repricing, so be sure to setup your minimum prices at a comfortable level if using this strategy with a repricer.

Those are my 2 preferred pricing strategies, and are used on about 90% of my inventory, and I find that they work very well for me.  As I mentioned at the beginning, I prefer to use a repricer, as it speeds things up, and follows the rules that I set for it.  Having it definitely saves me a lot of time, and in some cases makes me more for items than I originally list them for.

That’s all I have for today.  Any questions for me on this post? What Amazon pricing strategies do you use?  What pricing strategies have produced the best results for you? Let me know in the comments below!

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44 responses to “The Two Primary Pricing Strategies I Use When Selling on Amazon”

  1. galit says:

    Hi I dont sell FBA yet and i am pretty new seller what strategy would you recommend me ? thanks

    • Ryan Grant says:

      Hi Galit,

      I would recommend the default strategy from this post. I would start with it and then adjust if needed based on results.

      Best Regards,
      Ryan

    • Anu says:

      Wanted to know how to deal with the automated system wheat comes to suspending your account. I’m having trouble navigating thru that and it’s an fba issue

      • Ryan Grant says:

        Hi Anu,

        Can you please elaborate on your question? I don’t think I fully understand what you are asking.

        Best Regards,
        Ryan

  2. paul says:

    I like these. I’ve initially price at 100% ROI if only MF listings, or match lowest FBA. In one category I have a lot of listings against only one other FBA seller, but I was below 50% ROI, so I’ve been raising my price, and his repricer has been matching me as I go up.

    • Ryan Grant says:

      Hi Paul,

      Thanks for sharing! Prices can go up very quickly when there are only 2 sellers who use the default strategy that I outlined above. It’s very cool when that happens, as most times when it does I anticipated selling at a lower price.

      Best Regards,
      Ryan

  3. Will says:

    Ryan, can using this software ever result in an automated race to the bottom? If someone sets their price to be 2% lower than the lowest offer and you have yours set to 1.5%, wouldn’t you end up at zero and 1.5%? Best case scenario you reach your lowest limit set in the software (assuming that’s a thing), but then you may only be getting 20-30% ROI.

    • Ryan Grant says:

      Hi Will,

      In order to activate a repricer on any listing, you have to set a minimum price. The repricer will not go below the minimum price that you set. So in the example you mentioned, it could drop you down to your minimum price, but it wouldn’t be to zero.

      I have strategies for my repricer as well so that I minimize the effect of the issue you mentioned. If you set things up properly, it’s pretty easy to avoid having your prices go too low if you don’t want them to.

      Best Regards,
      Ryan

  4. Zacharie says:

    Any tips on private labeling? Do you plan on making a blog post about it?

    Any websites you recommend for wholesaling?

  5. Rob says:

    Hi Ryan, thanks for the detailed post, it couldn’t have come at a better time for me as I’m currently reassessing my price rules.

    How do you price against mf sellers when you’re fba? What about when you’re mf too?

    Have you got the repricer set up to switch strategy if amazon comes onto a listing it previously wasn’t on?

    • Ryan Grant says:

      Hi Rob,

      Thanks for the comment. I have different strategies for all of these instances, I will consider these questions for a future blog post.

      Best Regards,
      Ryan

  6. Nate says:

    How does this work for newer sellers? Always thought buy box rotation tended to weight heavily towards sellers with more/higher ratings

    • Ryan Grant says:

      Hi Nate,

      I have been using the same basic strategy for a long time. I would recommend you try this as a new seller.

      Best Regards,
      Ryan

  7. Nate says:

    What about pricing strategy when it is just you and Amazon as FBA options?

  8. Bryan says:

    Hey Ryan great post! Congrats on the success of your blog. Do you ever consider data from keepa/3camel when making pricing decision? if so what do you often consider?. Thanks!

    • Ryan Grant says:

      Hi Bryan,

      Yes I do, and the main thing I would look at would be the historical prices. If the price history shows that the price is lower than it historically is, there is a good chance that I would price higher to wait and see if the price reaches a similar level in the future.

      Best Regards,
      Ryan

  9. Rob says:

    Ryan,

    I’m just getting started using Appeagle as a repricer.

    Would you mind sharing the actual settings from Appeagle that you’re using for your strategies?

    Thanks,

    Rob

    • Ryan Grant says:

      Hi Rob,

      At this time, I won’t be sharing the exact settings, but I will consider it for the future.

      Best Regards,
      Ryan

  10. JT says:

    Hi, Ryan.

    Excellent blog. I just stumbled upon it and realize that our stories and timelines are similar as well as our overall numbers, volume, profit, inventory, etc.

    I’m curious, have you ever released your store name? I’m far removed from the online social circles that some sellers participate in but it’s always interesting to come across blogs or situations that basically mirror mine and consider that multiple success stories can be pretty identical without any contact. I’m curious because I often see a lot of the same sellers next to me and consider it friendly competition and how strange it is that our professional lives are so similar with zero interaction.

    Anyway, if you haven’t released it that’s fine. I wouldn’t mind exchanging seller names over email though if you’d rather keep it private. Keep up the good work!

    • Ryan Grant says:

      Hi JT,

      Thank you! I haven’t released my store name, and honestly don’t plan to for the foreseeable future. I have had the question come up before, and just don’t see a lot of upside in sharing it, but there is downside risk. I wouldn’t be able to share via email either, as I have decided not to share my store name with other sellers at this time. Hopefully this is understandable.

      Feel free to send me an email (ryan@ose.wpengine.com) and we can potentially share some strategies as it sounds like we are on similar paths from your comment.

      Best Regards,
      Ryan

  11. Hi Ryan

    Great blog. Thanks for sharing your repricing strategies. Great to hear you’re getting positive results from using repricing software.

  12. Hey Ryan,

    So I just started selling on FBA last week and sold a brand new printer I had ordered 2 years ago but never used. I priced it to match the low initially but then lowered it 10% to see the impact. The first thing I noticed was that Amazon actually served a box ad for it on a gaming site I was on (it obviously behaviorally targeted me as I was searching for the printer a lot to see various prices). Right after I saw the ad, I received an email saying my printer had sold. So I have 2 questions: 1. Does Amazon advertise your products when you win the buy box? 2. Do you think some sellers intentionally overprice their products initially and then drop the price significantly to end up on a site like camelcamelcamel? Reason I ask is I’m wondering if my decision to drop the price 10% made it move to someone shopping price drops as a new version of the printer was available for even less. Thanks for your insight. I have now subscribed to the blog and purchased your e-book.

    • Ryan Grant says:

      Hi Chris,

      Thanks for your comment, and for purchasing my ebook! As for your questions, on #1, I know they do retargeting ads, so I would assume it goes to the seller who has the buy box on the item they are displaying. I never thought that through before, but it makes perfect sense. 2. Yes, I do think so. I have personally done this on a couple of items where I was the only seller on the listing. It can be a good strategy to gain some additional exposure.

      Best Regards,
      Ryan

  13. ban says:

    Hi Ryan
    i read your post ,
    and i want to ask you ,
    since you see that by matching the price you are getting much more sales for 2 reasons 1) you have more the buy box ,2) there are always buyers who are looking on the cheapest FBA sellers and not on the Buy box (like im doing) ,

    why don’t you set up your default strategy to be 1-5 cents above the lowest FBA competitor,

    in this case you will have much more the Buy Box , and still avoids prices spiraling downward because of the sellers which continually adjust their prices to be the lowest.

    i think that 1.5% is too high , and you are loosing allot of sales ,
    more then you gain from the 1.5% you are higher ,

    and another thing i saw in last few weeks that even im few cents higher i don’t get the buy box the same percentage like the past .
    can you confirm it ?

    • Ryan Grant says:

      Hi Ban,

      Thanks for your comment. I do have another strategy similar to the one you mentioned that I do use.

      Unfortunately, I have noticed the same thing, and it appears there has recently been a change in the buy box algorithm to significantly favor the lowest price. I am doing some testing, with some matching strategies, as well as 1 cent above to see how those impact sales.

      Best Regards,
      Ryan

  14. Roland says:

    Hi Ryan. I was reading your post in view of using some repricing software for Q4 and all my research has shown that Amazon are giving the buybox to the lowest price only and that’s about 95% of the time. Where as this time last year I was pricing around 2.5% above and still sharing the buybox similar to your views in this post.
    I see your most recent post in the comments seems to reflect this change, have you now updated your re-pricing strategies accordingly?
    Thanks

    • Ryan Grant says:

      Hi Roland,

      I am always testing when it comes to pricing. I have been using some more aggressive strategies lately to get closer to the low FBA price, but I have noticed within the past few days that the 1.5% above strategy is working quite well again.

      Best Regards,
      Ryan

  15. Sam says:

    Any update on this pricing strategy? Is this still working?

  16. Wsm says:

    Any ideas on selling a product that is unique in design and has no competitors? How would you set pricing?

    • Ryan Grant says:

      Hi Wsm,

      My goal in that case would be to price based upon the value it offers to the customer.

      Best Regards,
      Ryan

      • Selena says:

        Hi it’s a tray that is versatile for any room such as kitchen dining living or even vanity room or bathroom organizer.

        • Ryan Grant says:

          Hi Selena,

          Without seeing the ASIN of the product, and evaluating the competition, it’s not possible for me to make a recommendation.

          Best Regards,
          Ryan

  17. Selena Ang says:

    I have listed this item for almost a month now and it is not selling. Amazon is one of the sellers and it looks like they are not sharing the buy box. Should i price lower than Amazon?

  18. Selena Ang says:

    I have listed my product for more than 3 months and sold only 1 item. Based on your method above, i should use the “match the lowest FBA” method. However, as Q4 is approaching, should i still use this method? I am referring to a toy.

    • Ryan Grant says:

      Hi Selena,

      Thanks for the comment, but unfortunately, I am unable to provide personalized pricing advice.

      Best Regards,
      Ryan

  19. booklearner says:

    Hello, thanks for the information; it is very helpful! I am relatively new to selling on FBA, and am finding that I STINK at pricing. I was wondering, since this post is a few years old if this is what you still hold to and find works for you. Also, if the lowest FBA seller sells their item (making you the lowest), do you reprice so that you’re still the second from the bottom? Or do you allow yourself to become the lowest? 🙂 Thanks!

    • Ryan Grant says:

      Thanks for the comment.

      This post is still accurate to what I am using for the majority of my pricing. In the event that I become the lowest price, then I will typically raise my price most of the time. If my margins are really high, then there are times when I am ok with being the lowest price.

      Best Regards,
      Ryan

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