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The 4 Most Costly Private Label Pricing Mistakes

By Chen Melamed March 14, 2016
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About the Author

Chen is a copywriter at Feedvisor with her finger on the eCommerce pulse. She loves easy-to-chew creative content, good food and discovering hidden gems.

This is the first installment of our 2 part series on how to avoid costly mistakes and implement a private label pricing strategy that works in your favor.

To get the most out of your private label products, it pays to do it right. But driving sale without direct competition for the Buy Box creates a whirlwind of pricing problems for sellers.

We’ve compiled a list below of the most common seller pricing mistakes you need to AVOID right now.

1. Manually pricing your products

You’ve got 1000 SKUs and one of your products is flying off the shelf! Great news! But what about the 999 other products you still need to reprice? As product prices constantly fluctuate, you constantly need to keep on top of each of your products.

So what happens? You spend all of your time adjusting your product prices manually to meet up with the dynamic marketplace. What a nightmare! With no automatic pricing solution in place, your hands are tied and your pricing suffers.

2. Lowballing your prices

One of the biggest advantages of being a private label seller is that you can capitalize on higher profit margins. But for the most part Amazon sellers are inclined to sell at a low price. Why? Because generating more sales increases your chance of ranking higher in Amazon Search. While implementing this sales rank tactic is highly appealing, it doesn’t guarantee you product discoverability as other factors such as keywords, product listings and reviews all come into play.

Low prices may get you the initial sale but you might not get the profit you’re hoping for. Don’t sell your brand short! Think about building sustainable brand equity. Pricing down just to get the customer to buy might be the perfect solution now but in the long-run getting customers used to your low prices creates risky expectations. Once you raise prices, chances are you’ll end up losing more customers and damage your customer loyalty.

3. Guessing the right price

So you’re spending hours of your day managing the pricing for each of your products but you have no clue what the right price is. What a mind-boggle! All this guesswork leaves you with little time to replenish, scout and manage your stock properly.

Understanding what the demand is for your private label products is super tricky. On the one hand, comparing prices to products that are similar to yours seems logical. On the other hand, pricing this way means you might be way off your profit range and aren’t optimizing your prices. The next thing you know, you’re losing control over sales velocity, are stuck with stale inventory and ultimately miss out on the big bucks.

4. Mishandling your inventory and sales velocity

Without the Buy Box, your no.1 priority is your sales rank. But competing to get your products featured high up in Amazon Search is a difficult strategy to crack. You price down to get that fast sale to top the Search rank. But before you know it, you’re swamped with orders, your new stock hasn’t arrived and you’re selling out too fast. Or you price too high and end up with cash tied up to slow moving items. Not getting the price right is risky business: without control over your sales velocity, your sales rank is damaged.

Bottom Line

Learn to identify and eliminate all of these mistakes. When it comes to pricing your private label products you need to think outside the box, have your finger on the pulse and consider employing a pricing strategy that covers your A-Z needs.

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