Amazon product pricing principles at different stages

Factors affecting product pricing

1. Different commissions are charged according to different categories. The normal commission range is 8% - 17%

2. Product + packaging material cost: Product cost will vary depending on whether the seller is a distributor or a factory; the product cost of a distributor mainly includes procurement cost and domestic logistics costs; the product cost of a factory seller includes raw materials, R&D, production, labor, etc. In addition, the packaging cost of the product should also be calculated.

3. Shipping costs and sales location: The logistics costs for choosing FBA delivery, self-delivery, overseas warehouse delivery, etc. are different. At the same time, if you are a European seller, you also need to consider the VAT fee.

4. Expected profit: For profit margin, the minimum profit expectation is 30%

5. Competitor Prices

Although you cannot copy competitors' prices when setting prices, you can use competitors' prices as a reference for setting and adjusting prices.

6. Marketing promotion: When promotional events and festivals come, Amazon will adjust prices on a large scale. If products are to be promoted on or off the site, corresponding promotion fees will also be incurred; sellers also need to consider this part of the cost before setting prices.

Pricing reference formula

▲ FBM product price = product cost + platform commission + self-delivery warehousing and logistics fee + expected profit + other

▲ FBA product price = product cost + platform commission + FBA first-mile fee + FBA fee + expected profit + other

Product Pricing Tips

1. The role of the number "9": 9.9 or 19.9 is equally attractive to foreign consumers, and sellers should make good use of this psychology of consumers.

2. Differential pricing: Display and price similar products together, and try to launch high-priced products to influence low-priced products. By using tiered pricing, there is a price difference between products, which stimulates sales.

3. Consumables pricing: For example, for a razor, the razor holder is cheap, but the blade is expensive; for a printer, the machine is cheap, but the consumables are expensive. The reason for this pricing is to make money through the consumables of the product.

This strategy can also be used in areas such as air purifiers, water purifiers, capsule coffee machines, etc. that require continuous purchase of consumables.

Pricing principles for products at different stages

Although we know the pricing formula of the product, the product has different pricing methods at different stages.

1. New product launch stage

In the new product period, there are no reviews, no rankings, no loyal customers, and no competitiveness. At this time, in order to quickly enter the market, sellers may wish to set a lower price; but not too low. It is recommended that sellers compare the best sellers of their competitors and set the price about $1 lower than Amazon choice.

2. Product growth stage

When the product has improved in sales, positive reviews, ranking and other indicators, the seller can increase the price by 0.1 USD each time, and then observe the sales, clicks and conversions. If the sales are stable, you can continue to increase the price by such a small amount; when the sales increase to a stable state, when the last price increase is made, it is found that the sales have decreased, and the seller must return to the price when the sales were stable the last time.

3. Product maturity stage

At this time, the product sales have reached a certain amount, and reviews and sales have been accumulated. The price of the product at this stage is gradually weakened, and the value and quality of the goods and the overall positioning of the store have become the main purchasing factors in the minds of buyers. It is recommended that sellers adjust the price to the same level as the market or slightly higher than their peers if the product quality is excellent, and further observe the sales and conversion rate.

4. Product Decline Stage

Products in the recession stage are at the node of product renewal and replacement, product sales are declining, and competition from peers is extremely fierce. If the product inventory is small, the seller can slightly reduce the price. If the inventory is large, the seller can take measures such as full reduction, discount and free shipping to clear the inventory to avoid long-term storage costs.