How to Optimize Amazon Pricing for a Successful Q4
Learn why you need to be optimizing your pricing on Amazon and how you can maintain or grow your profit margins during a key selling season, the holidays.By Rachel Van ClepperNovember 11, 2022
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Consumers are feeling the strain of inflation and budget constraints, and it is impacting their buying. Many consumers are choosing to shop online due to price and convenience and are buying less or being a bit pickier with their non-essential purchases. This is expected to heavily impact holiday purchases as we get closer to Black Friday and Cyber Monday.
While advertising is normally seen as the best way to increase profits, in an uncertain economy where costs are high for both sellers and consumers, your product pricing is where you need to focus your attention.
For example, if you spend the majority of your budget getting the best advertising spots with the most popular search terms, even if you win the sale, what is your overall profit? This will only get more competitive the closer we get to Cyber 5.
As a seller, you need to consider the cost for each sale to avoid the race to the bottom, both with advertising search terms and positioning in the Buy Box.
Stop paying more and getting less in return. Continue reading to learn how to protect your margins in the current competitive environment in e-commerce with repricing.
Your traffic variables, pricing, and advertising all work together to achieve optimal profit performance and changing one variable influences them all.
Why Updating Amazon Pricing is Necessary in Q4?
Inflation has caused the cost of goods to go up; what can you do to keep your profit margins high in Q4? You can do a combination of the following, roll the cost onto the consumer by increasing product pricing or pair down your advertising campaigns to reduce costs but potentially decrease traffic.
“One expected added cost in Q4 is Amazon’s holiday peak fulfillment fees, which started on October 15th and increased approximately $0.35. Sellers will have to increase their price to maintain healthy margins,” Strategic Account Manager at Feedvisor Gavin Peltz explains.
Pricing Optimization Don’ts
Raise prices because you feel like you “should”
Keep pricing as it is because you are afraid of how it might impact sales or your Buy Box share
Pricing Optimization Do’s
Adjust pricing with pricing tools like a floor calculator or repricing technology
Create a pricing strategy that coincides with traffic variables, marketing conditions, and advertising performance and spend
Don’t let the pressure of pricing decisions cause you to wait to make a change. Utilize a floor price calculator in your repricing software that will calculate your new floor price, including the updated fees. In most situations, you do not want to keep your Buy Box share if you are selling at a loss.
This is just one of the many fears that can hold a seller back from making necessary changes. Another is worrying that consumers will immediately notice any price changes, and this is a dangerous trap to fall in, especially during a critical selling period.
Changing the cost of products or repricing is especially important during the seasons when advertising becomes more competitive. As the cost per click (CPC) increases, your margins become smaller. You can then raise the price. But at some point, the price point influences demand. No one knows that specfic point. And that point is not static; it changes.
"As Amazon has increased fees during Q4, it's important to ensure that your inventory is moving at the right pace. Setting the correct pricing strategy and regularly reviewing performance is essential to staying profitable," Marc Dunn, Head of Customer Success Enablement at Feedvisor, explains.
How to Make Data-Based Amazon Pricing Optimization Decisions
With any pricing strategy, inflation or not, it’s important to explore the relationship between demand and price on all of your products.
AI repricers specifically can help you see how current market demand will impact your product sales, helping you find strategies to maintain and increase your margins, even if that means slightly increasing prices.
Whether your goal is profit optimization, target velocity, or liquidation, the algorithmic repricer responds to dynamic market conditions to help you meet your changing goals.
Testing continued optimization and data-backed decisions will help you be confident in your decision to change your prices, resulting in increased profit margins.
Rachel Van Clepper is a content marketing writer for Feedvisor, where she contributes to the company’s content marketing initiatives. Before joining Feedvisor, she was a senior content marketing writer for a nonprofit software company.
Final Thoughts
At the end of the day, protecting your margins is the core to any pricing or advertising strategy on Amazon. Feedvisor’s AI-repricing technology can help you optimize your strategies to maintain and increase your profit margins.
Feedvisor is capable of automatically understanding your traffic and profit variables and operating pricing and advertising in an integrated way to achieve your optimal performance. Learn how to start today to help with your Cyber 5 product repricing strategy.
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