Amazon Competitive Pricing Strategy 101

By Tami Ben-David
Published on December 10, 2014 | 1425 views

Amazon competitive pricing strategy

Within any retail sphere, be it a bricks and mortar store, online store, or online marketplace pricing competitively is crucial. When you’re up against other sellers who are selling exactly the same item as you, price is obviously key.

While other factors will influence a customer’s decision to purchase from a specific place, such as customer service, shipping time and customer reviews, at the end of the day, if the price is right, most of the battle is already won.

Amazon and Competitive Pricing

On Amazon, the price of a product is intrinsically linked to the Buy Box. Every seller wants to win the Buy Box as the Buy Box is responsible for over 82% of Amazon sales, but the question is how.

Knowing how to price your products in order to win the is very important and there are many repricing solutions that are designed to help customers with this task.

However, fundamental to any business decisions is first understanding the goal of your business. Depending on what your business objectives are, a different pricing strategy will be useful for you.

3 Competitive Pricing Strategies

1. Volume Focused

If you have a lot of inventory, or your inventory is easily replenished, your main focus might be on maximizing your sales volume. In this case, you might want to sacrifice your profit margin on each item in order to sell as many items as possible.

Your aim would be to find the best price to win you a large Buy Box share, which would enable you to boost your sales volume.

2. Margin Focused

On the other hand, if you have limited inventory or inventory that is not easily replenished, you might want to sacrifice your sales volume, and instead focus on raising your profit margin per item.

Your aim would be to increase your price as much as possible in order to secure a large profit margin, while at the same time maintaining a respectable Buy Box share and sales volume.

3. The In-Between Focus

If you’re neither of the above, your best bet would probably be to find a balance between the volume focused approach and the margin focused approach, in a way that will guarantee you maximum overall profits.

Your aim would be to find a price that balances Buy Box share and profit margin to gain you the most amount of profit.

To find the Amazon repricer that’s most effective for your business, click here.

About the Author

A British ex-pat, Tami been writing and content-strategizing for Israeli tech start-ups for the last 5 years. When she's not writing nerdy content, you can find Tami on open water charity swims or traveling to far-flung countries.

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