Right Pricing Strategy-Key tool for Amazon Marketing
Amazon is highly inclined towards fortifying its market in this vying online environment. Amazon more often introduces Black Friday or weekend deals for electronics, household products, tablets & smartphones, clothing, jewellery and much more. Prophesying traffic of customers, as an average, Amazon varies the price of about 80 millions products on its website in a single day. This is done to galvanize the buying frequency of buyers. The prices of items of deals are adjusted from higher order to lower order. No doubt, Amazon is a pro in upselling and its pricing strategy. Myriad of customers hit Amazon for online shopping and of course, they look for best items with best (cheapest) prices and fortunately they find Amazon as a perfectly reasonable marketplace. Thus they rush to grab discounted deals.
Precisely, Pricing Strategy is a process through which every business endures to set prices for each of its products and services. If you would not make and follow right pricing strategy and plans you might have suffered a great loss in business. Amazon, the giant of online marketplaces is caught on changing prices more often. Mainly the price strategy by Amazon is exploited to test the product’s demand or undersell a competitor on trending products.
Why do you need Pricing Strategy???
While selling on Amazon, a strong pricing strategy for your items in various categories is must because it can:
- take you to the top of the Amazon search page,
- attract buyers to your products,
- convince them to make buying decisions,
- seek advantage from the organic sales of the rushing Amazon customers and
- ultimately increase your revenue.
Prices to ponder:
While setting prices for your brand and items you need to attentively consider your lowest price & highest possible price. Because if you lack in the right price set, you may be impoverished of money or unable to sell any item.
The lowest price contributes to achieving profit while highest possible prize maximizes that profit. These prices should be set as they can take you to the front page on Amazon.
Profitable Price (Lowest price): The profitable cost includes floor price which needs to be taken into account. To calculate floor price,
1. Amazon Commission
2. Payment wiring
5. Amazon FBA Fees (You can consider upsides and downsides of an FBA)
6.Variable overhead allocation costs
7.Categories specific costs.
Highest Possible Price (Upper Price Floor): This price gets your product into the competition to be on the first page of Amazon search results. So set this price as sale boosting price. You can hike your product price as high as 20% of the highest price on top page. As an example, if the highest price on the top page is $20, then your upper price should be $24 But don’t be greedy and don’t make your product more expensive, else you can lose competition and sale. You might be surprised to know that Amazon uplifts its upper price only about 13% of the highest price of its top page. Thus buyers on Amazon are always blessed with the lowest price among other online marketplaces. Literally, Amazon has the key to hypnotize more buyers towards it. Amazon knows that “more will be the price, less will be the buyers”. So, while setting price list, use Amazon key to unlock your sales drive and revenue.
Pricing Strategy must have:
1. Stable price list: This helps in bridging trust between you and buyers. To build a long term trust on your brand and products, stable lower and higher prices are mandatory.
2. Occasionally deviated price list: The above point of stable price list is true but Price list with deviations (more often lower price) is also needed. Confused…??
Here are the reasons, why deviation is needed?
Pricing deviations at the moment can be below profit margin but in a long-term, it helps in increasing sales rank and organic sales. The deviation in price list can be done as cross-selling, festive deals, stock clearance deals and weekend deals.
Customarily, the price lowering is done during new product launches. You can think that it might degrade your profit but prophesy it helps in building the trust of your new products among buyers at the lower prices. Later on, you can end deal and cost relevant charges for that products.
i.Cross-Selling deals: Another price degrading can be done through cross-selling of products by offering deals on second purchase through your store.
ii. Weekend, holiday or festive Deals: Crosscutting in product prices may decrease the profit but it helps in increasing sales volume which ultimately results in high profit. Buyers rush towards the best and cheapest deals and products. Black Friday, Cyber Monday and festive deals will grab more buyers to your store. Remember, more buyers, more sales and above all, more profit.
iii.Prime Day Deals: On Prime Day, the vendors and sellers reward Amazon Prime members with 100,000+ exclusive deals on conspicuous products. You should also include Prime day deals in Pricing Strategy. The deal is deal, no matter, what and when customers are going to gush at your store and when they find favourable deals for them, their purchase is confirmed. Their confirmed purchases would turn into your profit margin and revenue-boosting deals.
iv.Stock Clearance: If you have a stockpile of any product, offer a stock clearance sale at the lowest price to your customers. Within no time, your stockpile of products will be converted into the stockpile of sales volume. Stock clearance sale has the magic to revitalize the lifeless product.
1. Catch Amazon Sponsored Products:
In fast-growing online markets, the advertising is becoming a challenging task. Thus Amazon has come with sponsored products program for Amazon sellers. The Amazon Sponsored service accelerates your product to the top page of Amazon search results and brings your products next to the best searches and results.
2. Pack Products with surprises:
Consumers will always cherish to have something “more” than they buy. You can make them happy with surprise gifts on their purchases. The packaging of the product can be captivating for customers when you offer extra services either in the form of extra items with their purchased products as any coupon, gift voucher, any further discount on their next purchases or any referral code. These extra efforts surely intensify more customers and also stick the existing customers in your store. Also, describe your products in the best way on the front side of product packing so that customers can easily find them. This packing and pricing strategy will certainly help in driving more customers, boosting sales volume and later on revenue of your store.
To conclude, it can be said that the pricing strategy for any product/service is critical in online marketing. It can either take you to the top rank if properly lined up and followed or can knockdown your sales. The pricing strategy should be streamlined with the customer’s perception. A healthy pricing list can heal your business and take your products to the top of Amazon search page. The top page of Amazon possesses the mystical power to boost your sales and earn a worthwhile profit.