Photo credit: Allspire via VisualHunt / CC BY-SA
On its surface, setting a price for your Amazon product seems like a relatively straightforward decision. Just look up your competitors’ prices, undercut them by a few cents, and you’re all set, right?
But once you start seeking out advanced pricing strategies, you’ll find a near-endless list of tactics that promise to help you find the one “perfect price” to dominate your competition.
This advice can range from the overly-complicated (“combine this statistical regression with these Excel pivot tables to calculate optimal price as a function of expected sales!”) to the trivial (“research shows that prices that end in .97 convert 2% better than prices that end in .99!”) to the downright scammy (“put in an MSRP that’s much higher than the actual price of your product. Customers will think they’re getting a massive deal!”)
But at AMZ Tracker, we advocate playing the long game over trying to optimize for short-term sales. You don’t want the success of your business to hinge on how long a tactic works before other people catch on — you want to build a business with a strong foundation that will weather the ups and downs of selling on FBA.
And the most sustainable and effective way to maintain long-term success is to set a high price for your product and do everything in your control to justify the premium.
With that in mind, here are some strategies to help you down this path:
Choose the Right Products to Compete Against
When deciding on a price point for your product for the first time, standard advice will tell you to use a competitor’s price as a benchmark. The challenge here is that in most niches, your competitors will be selling at different points across a wide range of prices.
First, you’ll want to know which price points are actually working. Use Unicorn Smasher, our free product research tool, to get a general idea of which of your competitors earn the highest sales.
Go to your Amazon marketplace, enter an important search term related to your product, and then launch Unicorn Smasher.
If you don’t have Unicorn Smasher, download it as a FREE Google Chrome plugin here first.
Now take a look at the “Estimated Sales” and “Estimated Revenue” columns. Which sellers are bringing in the most sales?
Let’s look at an example. Below is a screenshot of results in Unicorn Smasher for the keyword term “coffee grinder” (scrolled down to include more results). Sellers with the highest revenue numbers are highlighted.
You’ll notice that product #13, #25, and other lower-priced products have relatively high sales numbers, and this is often the case. But don’t let yourself be drawn into a battle to sell at the lowest price.
(A good rule of thumb is that at an absolute minimum, your price should have a 40 percent margin built in after cost of goods sold, shipping, and Amazon fees. Anything lower will make it extremely difficult to sustain your business).
Instead, focus on the products that are successfully selling at higher price points. These are the listings you should be using as a benchmark.
This means you should be matching them not only on price, but also on the attractiveness of their design, the quality of their product images, the effectiveness of their copy, and the overall optimization of their listings.
So in the example above, the products you should key in on are #17 and #21. Both of these products are shipping plenty of product despite their significantly higher price tag. A quick Google search on #21 reveals that Bodum is a fancy name brand from the UK, so this doesn’t necessarily suit our purposes.
But take a closer look at #17. This is an FBA product, it doesn’t have any obvious features that its competitors lack, and both the total review count and the average review rating are middle of the road. So how are they able to sell successfully at a much higher price?
Let’s take a look at their listing:
A few things to note here:
- All of the images are top-quality and clearly taken by a professional
- The sixth “image” is a well-produced video that demonstrates the product’s features
- The packaging is attractive and professional
- The bullet points in the product description clearly spell out the grinder’s selling points with concise and well-written copy
If you have confidence in the quality of your product, then it’s your responsibility to invest in doing all of these things well so that the quality is easily recognizable to the consumer.
There are obviously plenty of other factors that determine how well your product will sell, but the above points are completely within your control to do at a high level, and a little extra effort and investment here can justify a big markup in price.
Remember — the goal here is to be considered a premium option in the minds of your target Amazon customer. A large subset of Amazon customers will always go for the cheapest option, and that’s fine. But for those customers who are willing to consider more expensive options, your listing needs to have all the surface-level indicators of a product that’s worth a premium cost.
You may only have a few seconds of a customer’s attention to create the right impression, so invest the time and money required to create a listing with top-quality photos, graphics, design, and copy.
Give the Customer a Reason to Choose Your Product
Once you’ve elevated your listing to the level of the top-tier sellers in your niche, it’s time to switch gears and focus on differentiating your product from the other top products the customer is considering. In other words, once you have the attention of the customers who are willing to pay a premium, you need to clearly outline for them why they should buy your product.
This is especially true if your competitors have a more established record of sales and reviews.
A good way to start defining your main selling points is to create a list for yourself of all the ways your product is different from the upper-tier competitors you’ve just identified. Next to each of these differences, write out why a customer might prefer this differentiating attribute.
For example, if your product weighs more than its competitors, maybe a customer will prefer it because of its durability. Or if your product lacks a feature that your competitors have, maybe a customer will prefer it simply because of the absence of a pain point that comes with that feature.
Next, read negative and neutral reviews of your competitors, especially reviews with the highest number of helpful votes. What are customers complaining about? Make a list of the complaints that your competitors are receiving on their listings.
Unless the same complaints can be made of your product, this is incredibly valuable information that can help you define your product’s unique value proposition, and this needs to be incorporated into your copy.
After identifying your product’s unique benefits and your competitors’ most common critiques, revisit your listing. These qualifiers should be very clearly spelled out in the title, product description, and even your images.
Again — you only have a customer’s attention for a moment. You need to make it as easy as possible for them to identify what makes your product different and why this works to their benefit.
Let’s return again to the example of the coffee grinder. Let’s say you sell a small stainless steel coffee grinder with 12 grain settings and a simple cleaning system. Even if the differences between your grinder and other top-tier grinders are minor, they should still be leveraged.
Maybe the motor in your grinder isn’t as strong as your competitors, but is it quieter? Maybe you have fewer grain settings, but is the grain more consistent? Maybe your grinder is smaller, but are there fewer components to clean?
Reading negative reviews will help you further define your go-to selling points. Most complaints about top products seem to be about uneven and/or inconsistent grain size, components that break easily, and pieces that are difficult to clean.
This suggests that customers are willing to look past features that you may lack as long as you’re able to address these issues. Your title, images, and bullet points should account for this.
So instead of marketing a coffee grinder with 12 settings and a stainless steel body, market a coffee grinder that’s durable, gives you a consistent and even grain, and is easy to clean.
(Of course, it goes without saying that you shouldn’t make any claims about your product that aren’t true. Aside from being unethical, this will always hurt you in the long-run. If the most common complaints about your competitors’ products can also be applied to your product, perhaps you should present these complaints to your supplier to see if any of these issues can be addressed.)
You don’t have to get every customer. Some may simply prefer the features that the other product has and that’s ok. You’ll never have a complete monopoly on your category, but you can have a monopoly on products that combine x and y features without z pain point.
As long as you lean into these differences and make sure they’re clearly defined, this should be sufficient to command sales while maintaining a high price.
Finally, another great way to do this is to offer premium packaging. It’s a superficial measure, but it can really work well. According to a recent study by Dotcom Distribution, customers put high value on aesthetics. So much so that 40% of online shoppers said they’d be somewhat more likely or much more likely to purchase from a seller that offers premium packaging.
Here Are 2 Simple Things You Can Do to Boost Your Packaging Today:
- Improve the box: Think beyond the white or brown box. Get custom printed boxes or even custom shaped boxes for your products.
- Provide inserts with coupons: Use this to build your email list as well to get more return customers and consistent sales.
Invest In Your Brand
At the end of the day, the long-term strategy that always wins out is investing in your brand. Whatever features your product has or doesn’t have, value can always be created with great customer service, taking responsibility for product quality, delivering relevant and valuable content, taking an extra step to delight your customers, and maintaining professionalism in every customer interaction.
It can be tempting to focus on opportunities to optimize for short-term sales, particularly on a platform like Amazon where the rules of the game are always changing. In many cases, it will make sense to capture these opportunities. But at no point should you let this come at the expense of the long-term vision for your brand.
Use your high price as a challenge for your company — a challenge for you to earn that premium at every turn. Try to surpass your competitors in every capacity — product, listing, customer service, content, brand — and customers will reward you for it.
If you’re looking to improve your brand and your listing, take advantage of AMZ Tracker’s 7-day FREE trial. It’ll show you — black on white — what’s working and how to optimize your listing.
