Learn the 5 Proven Tips on How to Price Your Product on Amazon

Perhaps the most important part of pricing a product on Amazon would be the actual pricing model adopted, depending on the needs and goals of your business.  In our experience of working across thousands of products on Amazon, following are some of the most widely used models:

Competitive Pricing with Low Margins: This strategy is used when the customer’s buying decision majorly depends on the products’ price and when there is no product differentiation. This is particularly true if your product is a mass-market product or a product that fulfils everyday needs, with many competitors targeting the same audience. 

• Premium Pricing with High Margins: The idea with this strategy is to price the product higher than competitors to encourage a favorable perception among buyers. For premium pricing, ensure that your product has a unique feature that competitors cannot offer and that these features are highlighted in your listing. These need not be product specific; they could also be propositions like your intrinsic brand value, some special packaging, or any kind of feature that increases your credibility, such as an organic certification. 
• Dynamic Pricing: This is used when you want to adjust prices rapidly as per market conditions, or if you wish to be a price leader in your category. You can basically charge consumers different prices at given points in time, for the same product. This may depend on: the traffic on the Amazon marketplace, consumer demand, the pricing of your competitors, the seasonality trends in your product’s usage, etc. However, use this with caution as constantly changing prices may detract from your brand, or drive you into price wars with competitors.
• Launch at High Price and Lower to Stable Pricing: This is an adaptable pricing strategy, where the seller usually starts off with a higher pricing during the initial launch and slowly reduces it to arrive at a more stable pricing. This is generally done if you have a highly anticipated product, or if you are a product pioneer, or if limited numbers are available initially.
• Loss Leader Pricing Strategy: Loss leader pricing often prices the product much lower than the competition, such that the seller often incurs a loss over the sale. This is mostly done by sellers who want to introduce a new brand in a segment or appeal to a large audience. Another way this strategy can be utilized on Amazon is for products where you are offering various color or size variations. For example: the top-performing variation can be priced at much lower prices to attract higher traffic, while other variations can be priced higher to make up profits. 
• However, you may risk your product being labeled as a cheap product when using this strategy. 
• Deals and Strikethrough Pricing: Strikethrough pricing is useful to attract the attention of the customers on Amazon. It gives the idea to the customer that they are receiving a pricing bargain, above and beyond the already competitive price. This helps in winning over the customer, but will most certainly be imitated by competitors in the same segment.
• Absolute Value Pricing: This is a common pricing strategy wherein complementary products are bundled together to increase the total value of a customer purchase. You can also offer discounts on multi-packs to provide more value to the customer.  This seems like a win-win situation for both. The customer gets the product at a price lower than the sum of the individual product prices, and the seller can maximize the basket size of the buyer at a lower Amazon fulfilment fee.  Sellers can use this strategy to introduce new products, increase the sales of slow moving goods, or position the offering as a gifting item.