When you’re creating a pricing strategy, unless you have a unique patented product (and even then, your patent will only last a limited time), you’ll want to look at your competitors’ pricing as a guide.

For instance, if you’re selling colorful vintage style floral print dresses, you’ll want to look at similar clothing and see what kinds of prices customers are paying. There may be a difference between the top brands and others; there may be a wide range of prices, or there may be quite a narrow band of prices within which you’ll need to fit.

But should you really consider all those products your competitors? That depends.

For instance, you may have competitors who are very small sellers with only a few products in your product segments. It probably isn’t really worth thinking about what they charge, as they are ‘price takers’ rather than ‘price makers’. Their limited size gives them limited market power.

You can weed them out by simply looking for how much they sell on Amazon and what their sales rankings look like.

Competitors with poor reviews are also unlikely to limit your pricing. Potential buyers may be attracted by the low price, but put off by the negative reviews, or possibly by the lack of any reviews. Additionally, Amazon probably will penalize them for those reviews by ranking them pretty low, so buyers may not even get to see those products.

You may also find some competitors regularly price at a premium to the rest of the market.  Work out why that is. It may be because they have a well known brand name, or offer superior reliability or a unique functionality. A good example of this would be a fountain pen manufacturer that makes its own special nibs for calligraphy.

Some brands also sell at a premium price because buyers think they will become collectible; Lego special editions, for instance.

If these price makers have advantages that you don’t, then you can regard their prices as the upper limit to what you can charge.

Making a price map showing the prices at which each of your competitors sells, and the rough amount of their sales, should give you a good idea of how the market is laid out and where you might fit.

You might also want to look at substitute products. One example might be if you sell a sink plunger, look at the price of other ways of unblocking drains. That might also give you good marketing copy; “$50 a year on bottles of drain cleaner or a $6 sink plunger? You decide!”

Now you can evolve your pricing strategy. First of all, you need to decide where your product fits on the map. That’s not necessarily in the middle; if you think you have a high quality product compared to most of the others in the segment, it might be further towards the top priced sellers than the bottom.

Then you need to think about getting started. Right now, if you have no sales and no reviews, buyers are taking that quality on trust. One good way to get past that is to decide on a launch discount to encourage customers to try your brand. That can be particularly effective when there’s one big name, or maybe two, that you need to compete with.

Why not price lower? Because then, if you want to raise your price later, you may lose sales as customers feel bitter about the price hike. Offering a limited discount has the advantage that when it’s over, you can revert to the regular price with no hassle. (And of course Vipon can help you with discounts if that’s the way you want to go.)

As for the permanently out of stock products that seem sometimes to fill Amazon, you can go ahead and ignore them. If they’re not in stock, they’re not competition!