The most effective Amazon pricing strategies follow an ongoing pattern of regular price changes. The best Klein Management Systems (KMS) clients update their prices at least a few times each week, but more frequent changes are even better.
You can’t just set your prices and forget them. You need to continually monitor your competition and your own sales data to find the optimal price point for each of your products.
Here’s an overview of how to develop an effective Amazon pricing strategy:
- Know Your Costs
You need to know your costs before you can set prices that will generate a profit. This includes all of your direct and indirect costs, as well as your desired profit margin.
Your direct costs are the costs of goods sold (COGS). This includes the cost of the product and any shipping or packaging costs.
Your indirect costs are all of the other costs associated with running your business, such as overhead, marketing, and employee salaries.
You also need to know your desired profit margin. This is the percentage of each sale that you want to keep as profit. A typical profit margin is 20%, but it can vary depending on your business and your product.
- Know Your Competition
You need to know what your competition is charging for their products. The best way to do this is to use a repricing tool, such as KMS, that will automatically track your competition’s prices and adjust your prices accordingly.
You should also manually check your competition’s prices on a regular basis. This will help you to catch any pricing changes that your repricing tool may have missed.
- Know Your Sales Data
You need to know how your prices affect your sales. The best way to do this is to use a repricing tool that tracks your sales data.
KMS clients typically see a 10-15% increase in sales when they implement our repricing software. This is because our software optimizes prices to find the seller snap pricing sweet spot that maximizes sales while still generating a profit.
- Set Your Prices
Once you know your costs, your competition, and your sales data, you can set your prices.
You should start by setting your prices at the high end of your desired price range. You can then lower your prices if you need to in order to compete with your competition or increase your sales.
It’s important to remember that your prices should never be so low that you’re not making a profit.
- Monitor and Adjust Your Prices
You should monitor your prices on a regular basis and adjust them as needed.
You should also monitor your competition’s prices and your sales data. This will help you to know when to adjust your prices.
KMS clients typically update their prices a few times each week. However, more frequent price changes are even better.
Klein Management Systems has been helping Amazon sellers to optimize their pricing for over 10 years. Our repricing software is used by some of the largest Amazon sellers in the world.
If you’re looking for a repricing tool that can help you to optimize your prices and increase your sales, then please contact us today.