Ultimate Guide to Amazon Pricing: Top 6 Strategies for Success

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Expert Advice: Ultimate Guide to Amazon Pricing: Top 6 Strategies for Success - Tips by Pritesh Mittal (COO & Co-founder, Growisto)

Tip of the week: How to get repeat business on marketplaces such as Amazon?

Case Study: How did Growisto help the largest sports brand achieve 2.1x increase in non-brand clicks?

Tool of the Week: Master keywords on Amazon with Datarova

Expert Advice

Ultimate Guide to Amazon Pricing: Top 6 Strategies for Success

As per a report published by Hubspot, 82% of buyers in the US state that pricing is the most important factor driving their purchase decision on Amazon. From a selling point of view as well, pricing plays a big role in determining how you rank on the Search Page and also, your chances of winning the Buy-Box.

In this newsletter, we will talk about different kinds of pricing strategies depending on your business needs and goals. In our experience of working across thousands of products on Amazon, following are some of the most widely used models:

Deals and Strike-through Pricing: Strike-through pricing is useful to attract the attention of the customers on Amazon (as shown in the image below). 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.

For example, in the example below, a reduced price of around $26 is shown along with a striked through price of around $59. This gives the customer additional incentive to purchase the product at a much lower price.

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. 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.

For example, in the image below, body scrub and body lotion is bundled together to provide a value pricing benefiting the customer and also increase the total cart value benefitting the seller.

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 organic certification.

For example, the price difference of both the toners in the image is drastic for the same amount of product. However, as one of them includes unique rice extracts (clearly mentioned in the listing), they have added a premium price.

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 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.

For example, one of the best examples is Apple, which has made its product launches into full events with tickets and fans to build as much hype as humanly possible. Mega-fans buy the newly unveiled products the moment they're available. As each new product is released, the older models get shunted down the pricing ladder.

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.

In order to figure out the best strategy that works, you need to take into consideration multiple factors, such as calculating optimal price range, identifying the right audience, analyzing industry trends and competition, and A/B testing your product pricing.

Tip of the week

How to get repeat business on marketplaces such as Amazon?

Brands often complain that it is difficult to get repeat business from the customers from marketplaces such as Amazon.

This is true that marketplaces normally do not lead to repeat business as much as our website and app would give (and that is the reason why we focus on the website/app so much). However, there are a few things that we can do on marketplaces, especially Amazon to increase the repeat purchases:

1. Use Subscribe and Save feature: If your product category permits this feature, this is the first thing you should do to boost repeat sales

2. Amazon DSP: You can target the customers who have visited your page or purchased your product through DSP ads

3. Run Sponsored Display Ads: Sponsored Display Ads also let you remarket your products

4. Review Emails: In your review emails, offer a discount coupon for the next purchase on the platform

5. Product packaging: If operationally feasible, add a discount coupon for the next purchase in your product packaging

Case Study

How did Growisto help the largest sports brand achieve 2.1x increase in non-brand clicks?

The client is one of the largest global sports and fashion brands. The product catalog includes a wide range of footwear, apparel, and other accessories.

Our Objective:

• To increase the organic traffic of one of the biggest footwear players in the world, which had not focused on in-depth efforts for organic traffic increase

Our Strategy:

• Suggested over 1000+ new pages that could be created as well as optimization of existing 300+ pages

• Extensive link building to push ranks for highly competitive keywords like 'men's walking shoes', 'sneakers for men', etc.

• Extensive A/B testing of SEO tags on important pages, focussed internal linking structure and SEO activities on seasonal keywords (e.g: winter-wear related keywords were targeted in November)

• Conducted a technical audit of over 100+ parameters, specifically focusing on issues like page speed, coverage issues, etc.

Results:

• 2.1x Increase in Non- Brand Clicks in 12 months

• 2.6x Increase in Non- Brand Impressions in 12 months

• 64% Core Business Keywords are Ranking in the Top 30 Results on Google SERP

Want to upgrade your SEO strategy?

Tool of the Week

Master Keywords on Amazon with Datarova

Datarova provides a comprehensive set of tools for keyword tracking and rank analysis.

1. Keyword Discovery: Get real sales data for thousands of keywords in seconds.

2. ASIN Insights: Reverse-engineer any ASIN to see their most profitable keywords.

3. Track Recent Trends: See the historic demand for an entire niche to intelligently forecast inventory purchases.

4. Keyword Monitoring: Track sales for keywords in your niche and uncover new keywords that drive sales.

5. Keyword Tracking: Track keyword rankings of your products and your competitors to drive organic sales.

6. Competitor Tracking: Monitor all the ASINs in your niche to see any changes your competitors are making.