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6 Tips for Pricing your Products on Amazon

Whether you’re just starting to sell on Amazon, or you’ve been at it for years, one of the most critical steps to success is pricing. Even before internet retailing became popular, customers consistently chose products based on prices. Now, pricing is one of the major pillars that hold up the holy grail of success on Amazon: the buy box. Another pillar is exceptional customer feedback, which will be explored in an upcoming blog post.

So how do you set that price? Pricing is, like many things, a balance of instinct and rules. Imagine it this way: you’re an event photographer. As a photographer, you rely both on knowledge and an artistic eye to make beautiful photographs.

Pricing is the same. As you set prices, you will use a mixture of rules and gut instinct. Just like photography, you’ll want to get comfortable with the rules before you start letting your gut lead you to make big pricing choices. Here are 6 techniques to help you with your Amazon pricing, and maintain appropriate and competitive prices into the future.

  1. Consider your costs and fees first: Before you even think about a product’s final price, you’ve got to face all the costs along the way. From manufacturing to inventory to marketing to shipping, online retail has a huge number of costs to take into account when setting that price.

    And of course, once you step into the realm of Amazon, there are the dreaded marketplace fees. These can vary greatly from product to product (ranging anywhere from 8% on electronics to 20% on jewelry), so do your research before you list your product.

    It may sound basic, but tallying up all these costs and double checking you’ll be pulling a decent profit is something every online retailer should do before adding a new product. If you’re curious about what these costs will be for your company, Whitebox has a free estimator that can show just how much everything will cost.

  2. Price according to brand: Just like a rancher brands his cattle before he lets them graze, you’ll want to think about branding before you sell your products.There are some general rules to follow, depending on if you are selling as a low cost leader or as a premium brand.

    Low cost leader products are generally straightforward - relying more on changeable pricing and knowledge of other products. And of course, you should think about following the good old .99 cent rule, so that your products look as low cost as possible.

    With premium products, you’ll want to build a sense of quality, which may mean shooting for more consistent, slightly higher prices. You may want to set up a minimum advertised price policy (MAP), to maintain a certain pricing threshold and protect your brand image. And rather than setting a price like 49.99, which indicates a low cost product, set your price at a whole number like 50.00.

  3. Keep it flexible - and consider auto pricing: As nice as it would be to say you’re done after you’ve set that initial price, it may not be realistic for many sellers. Flexibility is important, because the market is always changing. Remember: unless you are selling premium products, don’t advertise a set price, since in all likelihood, this will change often.

    Some sellers on Amazon opt for auto pricing. Auto pricing is simple: it allows for  changes in price in response to other seller’s changes. It can be a great option for retailers who sell products that have a lot of competition. This can be especially important for holding onto that sneaky buy box, so you don’t miss out on sales

  4. Drive customers back to your own siteRemember: you always want to encourage your customers to buy from your own site. Without those big fees from third party marketplaces, you’ll be able to turn a larger profit. The simplest way to do this is to ensure that you set your Amazon prices at least a little higher than your website. You may also want to consider adding promotions that are only available on your own site.

  5. Follow the $10 LawWhen using FBA and selling on Amazon, $10 is the magic number. When your products fall above or below this number the rules often change.

    For products less than $10, turning a profit and keeping your products affordable can be tricky because of Amazon’s minimum fulfillment fees. This means lower priced items are generally going to have less margin, because of these fixed fees. For example, a product that sells for $5 on your own website may have to jump to $11 in order to turn a profit. Items above $10, so long as they have decent profit percentage, have more ability to absorb the fixed fulfillment fees.

    If you’ve got a lower price item, don’t despair - there are innovative ways to make it work.  Strategies like multipacks can help you move into the more profitable $10 plus territory. Additionally, if you have strong profit margins for your product, then you’re golden.

  6. And don’t forget about that customer feedback: Even if you follow all of these rules for pricing, remember that you won’t get anywhere on Amazon without excellent product and seller ratings. Just think about how you make choices when buying products on Amazon - do you pay as much attention to price when the product has only two stars? Do you buy from a seller who has a feedback of less than 90%? Most likely not. If you want that buy box, you had better have great seller feedback in addition to appropriate pricing.



Pricing is only one piece of the puzzle. If you really want consistency with product reviews, you’ll need to work towards controlling the distribution channels. This means taking control of all parts of the process - from manufacturing, to shipping, to customer service - to ensure your customers receive the best service and products possible.

Of course, this is easier said than done, and you may feel it will be impossible to oversee all of these processes. Fortunately, ecommerce automation can help to streamline this process. At Whitebox, we work with our clients to automate as much as possible, and we help with pricing, distribution and almost everything in between. Check out our estimator to see what costs you can expect while selling online, and feel free to reach out with any questions you might have about Amazon pricing for your product.