Are you ready to take your Amazon Seller Central pricing strategy to the next level?
Pricing is one of the most important factors in determining your success on Amazon. A lot of people think it’s as easy as just landing on the lowest price—but that won’t set you up for long-term success. The truth is, it’s all about finding a price that will help you sell more products … that’s what will bring more money.
How do you figure out this magic-number price?
Spoiler: It’s not just one, fixed number. It’s about many different prices—and knowing when to use each of them.
Let’s dive in.
eCommerce Trends
We’ve all heard the expression “the future is now.” And that’s certainly true when it comes to e-commerce. The world of retail has changed drastically in the last few years, and it will continue to flex and evolve in the 2020s and beyond.
Why? Because despite what the naysayers said, e-commerce is not a passing trend. Rather, this model is decidedly here to stay and will continue playing a principal role in the greater retail industry.
What does all this mean for you?
Whether you’re an entrepreneur seeking new business opportunities or a small business owner looking to grow your brand, turning to e-commerce may be your golden ticket to newfound profitability and business success.
But be warned that the world of e-commerce comes with challenges of its own. For many, pricing is chief among the woes of e-commerce sellers. Believe it or not, it’s one of the main reasons holding them back from making real progress with their business.
But pricing doesn’t have to be a roadblock to your success as an e-commerce seller. In fact, if done right, it can be the cornerstone of your profitability.
In this post, we’ll show you how to set up dynamic pricing so you can take a hands-off approach and watch your prices respond to market changes and adjust themselves, automatically.
You can—and should—change your prices regularly
With a dynamic pricing strategy, you can change your prices as often as you want—and you should. Done correctly, regularly adjusting the prices of your products can help you:
- Increase sales
- Maximize profits
- Lower advertising cost of sale (ACOS)
- Improve return on spend
- Grow and control your competitive landscape
How does it work?
Imagine one of your competitors is getting ready to have a sale on a laptop. During their sale, they’ll be selling the laptop at a lower price than you are. In this case, you may consider temporarily lowering the price of your laptop so that you can completely sell out of your laptops before your competitor even starts their sale.
Or imagine this. You sell organic body lotion, and some of your inventory is about to expire. Again, you might consider temporarily lowering the price of your lotion so that it sells out quickly before it expires.
Pretty sneaky, huh?
That’s the dynamic pricing advantage.
How the Dynamic Pricing Tool Works
Adopting a dynamic pricing strategy brings a lot of opportunities to your business. It’s also advantageous if you work with multiple suppliers or manufacturers.
For example, suppose you have several different suppliers and/or manufacturers for one product, and you need to figure out who will give you the most bang for your buck.
This is where the dynamic pricing tool comes in.
First, it analyzes all of your competitors’ prices. Then, it uses this data to recommend a specific price that’s neither too high nor too low in comparison. By Goldilocks-ing just the right number, the dynamic pricing tool gives you the exact price that’s primed to make you the most money.
The Importance of Competitor Data
To get to that not-too-high-not-too-low-but-just-right number, the dynamic pricing tool will issue a report outlining all of your competitors’ data.
This report will detail how many units each competitor sells per day, as well as where they sell each of those units, outlined by country. It will also show you what kind of discounts your competitors are offering; this can help you decide whether you should lower your prices, raise them, or keep them stable for now.
If you’re worried your business might be too small still to realize any gains from this tool, think again. In fact, this report of competitor data is particularly useful if there are only a few players in your space because it gives you the insight to deeply analyze not just a share of the market but all your competition.
Why You Should Set Your Prices Based on Data
New to the e-commerce game?
When you’re starting out, it can feel like you’re swimming (or, really, drowning) in a pool of data. With so much information, it can often feel more overwhelming than helpful.
But once you understand how to wrap your head around all the information, you’ll see that there’s a lot out there that can help you make powerful pricing decisions.
Learning how to set your prices based on data is so important because it empowers you to:
- Grow and control your competitive landscape
- Change your prices to match the seasons
- Use automated rules to set prices
- Get daily pricing reports
Let’s break it down.
- Grow and control your competitive landscape
Now you know that dynamic pricing is a must-have tool for any e-commerce brand. With it, you can make real gains in growing your business and expanding your competitive landscape—and you don’t have to make short-term sacrifices in profitability to do it.
Even as you leverage dynamic pricing to help you scale your business, you can still maintain a steady profit margin while you do it.
- Change your prices to match the seasons
You know you need to regularly change your prices to stay competitive—but have you considered that you need to change your prices to match the seasons?
With a dynamic pricing tool, you get the smart intel you need to know how to change your prices based on time of year, weather, holidays, and special events and sales.
This is particularly useful when you’re planning a sale because when you change the price of an item that’s in high demand, a significant increase in revenue may follow.
- Use automated rules to set prices
At this point, I think you get it: Dynamically changing the prices of your products can lead to enormous growth in your business’s revenue, profitability, and overall health.
What is the key to maintaining that success over the long term? Learning how to get your prices to change automatically.
It all starts with creating automated pricing rules. With these rules in place, you can benefit from a system that will automatically adjust the prices of your products based on data swells in your business and the overall market.
It’s about maximizing profit and minimizing effort. In the end, the goal is to increase your profit margins by finding the best price for each product in each channel at any given time—but with the least amount of effort on your part.
- Get daily pricing reports
Even if the prices are adjusting themselves, you still want to see what’s going on with your business.
This is where daily pricing reports come in.
With detailed pricing reports delivered to you daily, you can have on-demand access to
- All your products’ performance data
- Keyword competitive analysis
- Product rankings
- E-commerce trends
Having all this information primed and at your fingertips won’t just make you a better e-commerce seller—it’ll make you a better businessperson, one who has the actionable insight to strategize intelligently.
Remember: Amazon Price Protection Policies Actually Protect you as a Seller
Figuring out your pricing strategy is one of the toughest—and most important—aspects of building and growing your e-commerce business. Without committing to a clear pricing strategy, you’ll likely never hit those big profit numbers you’re dreaming of.
The most common mistake e-commerce sellers make when setting their prices is failing to think about the customer. More specifically, they fail to think about how the customer perceives the value of their products and/or services. Without fully understanding your customers and their values, it’s too easy to either undercharge or overcharge and, ultimately, frustrate customers and lose sales.
But as an Amazon Seller, you do have some protection.
Amazon’s price protection policies can help protect your company from customer dissatisfaction with price changes, as well as competitor attempts to undercut you on price.
Stay Nimble With Dynamic Pricing
A dynamic pricing strategy empowers you to remain nimble in the face of market changes, adjusting who you’re selling to and how much you’re selling for to increase sales, basically on demand. It’s a strategy that uses supply and demand factors to set prices for goods and services on a situational basis.
Who can take advantage of dynamic pricing?
The strategy is best used by online retailers who have the ability to monitor their customers’ shopping habits and adjust their prices accordingly within an algorithmic framework.
But keep in mind: A dynamic pricing strategy does NOT mean adjusting prices daily; rather, it means adjusting prices intelligently, in response to real-time data from customers and market conditions.
It’s not about guesswork. It’s about data. Dynamic pricing enables you to understand what customers are willing to pay at any given time—so you can set your prices to match and take home the sale.
And Profasee is the tool helping you do it.
We’re dedicated to helping you find the optimal price—for any product, at any given moment.
That’s why we created our Pricing Reports tool. It automatically pulls in data from Amazon, giving you insight into your competitors’ offerings so you can ensure your prices are competitive. Plus, by giving you an overview of how each product performs on Amazon, our tool can even help you make decisions about future inventory orders.
Dynamic pricing doesn’t have to be so mysterious. Profasee’s Pricing Reports tool breaks down all the data so you can grow your business dynamically, starting today.
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