A lot of Amazon sellers have a rather functional attitude to pricing. They set up a repricing mechanism and they say “Let me have the second lowest price on Amazon for this type of product”, and off they go.
Some are not so clever. They set up a repricing mechanism and say “Let me have the lowest price.” And so does someone else. They will now battle to the death, or till one of them runs away.
So let’s look at pricing as something like Game of Thrones, instead. Remember that every price sends a message, and that while customers have one perception of it, your rivals have their spies out and they may be reading something else into that message.
Having the lowest price on the market all the time is a Ser Gregor Clegane move. It says you have the brute strength, the inventory and the product margins to take on all comers and win. But if you don’t, sending that message is a really dumb thing to do. You just have to hope that the real monster fighters don’t want to take you on.
Hovering around the bottom of the market is quite a sneaky move. It’s the kind of move Petyr Baelish would pull, or maybe Varys. You compete quite hard, you’ll probably get good rankings and good sales, but you’re not striding out into the arena to take on all comers.
However, you might decide to price your product a bit higher because it’s better. If you have great reviews and a higher specification product, you may want to do this. Pricing such a product low sends a message that maybe it’s not as good as you think it is. (Remember Sansa Stark before she got smart?) Price a bit higher, and you’re saying “Yes but look at the features”.
(You’re also making a better profit margin, of course.)
There are a few products which price right at the top. These are the Cersei Lannisters and the Margaery Tyrells. If you have a product like this, it has to be top price. If Louis Vuitton or Hermès had a dollar sale, they would destroy their brands completely.
Needless to say, this may not look like a ruthless place to compete, as everyone is being terribly polite and ceremonious. But in fact, it’s probably one of the most ruthless markets of all, and if you watched Game of Thrones attentively, you know that!
However, if you have a product that’s truly exclusive, Amazon is probably not the right place for it. When Sansa Stark got ‘sold’ to Joffrey, it wasn’t in the marketplace, it was in a council chamber.
However, occasionally pulling a surprise tactic can work out spectacularly well. Arya Stark and Tyrion Lannister are your role models here. The surprise tactic on Amazon is the promotion, whether it’s a Lightning Deal, a coupon discount, a Prime Day special, or a limited period offer. If you don’t usually go out swinging your sword for the lowest price, your opponents won’t be expecting it, and you can cut their legs from under them. Carnage!
Or rather, for you, a nice boost to your sales.
It’s a great tactic because you can use it in so many situations. Surrounded by enemies, too much inventory, running out of cash? Pull your surprise tactic, sell the excess stock, get a cash boost, and you’re back in the game. Or doing well but just need to get that bit further, like Stannis Baratheon talking to the Iron Bank? Surprise tactic, boost your sales, move into another league.
Start thinking about your price as both a message and a weapon. It’s Game of Sales on Amazon, today and every day!
