Getting the right price is hard. But we have a simple solution to get to the most suitable price for your product.
When thinking about how a customer views your price, “How much would you pay for this?” is not the right question to ask.
Price is always relative to other options that people have. If you products are the exact same as your competitors – then you have very little pricing power.
If your product has some unique features, then certain customers will be willing to pay more.
The key is to understand what makes your item different to other sellers products. You need to highlight the unique features for your product in your title, listing text and images.
Next, think about who might want to benefit from the unique benefits your product offers. What problem does it solve for those users?
Imagine you are selling headphones – but yours are waterproof and can be used for swimming. Someone looking to buy regular headphones will compare them to the other options available on the market.
But, to swimmers, your product offers a unique benefit and they would be willing to pay a lot more to have great music while they swim.
Go through your item and try to understand what unique customers might be willing to pay more for a particular benefit.
Next, check if there are any competitors offering a solution to the same problem. You pricing can then be the average of the competition, a little higher or a little lower.
In the past, when setting the price for an item, we always priced it a little below the average for the market. But after running some tests at different price points – we found that increasing the price often increased sales and profits.
With Amazon, it is impossible to know exactly what will work best, you have to test different options and use the data to guide your choices.
When setting your price, be sure to ask yourself:
What are the alternatives for my customer, what other products solve this problem?
What are the pluses and minuses of this product? So you’re getting an idea of what customers see as the trade-offs, what are the issues you need to address with your product.
What range of prices are appropriate – what is the lowest price you think you could sell this item for, and what is the highest? What would be such a good price you’d snap it up?
Sometimes, simply having a higher price makes people think the item is better.
Overall, when launching a new product, it is best to start with a lower price to get the sales going. But once your item has over 20 reviews you can set the price to be what you expect people will pay for it.
Then the simple answer to what is the perfect price is to test a range of prices and see what matches your strategy.
The other main consideration when setting price is what is your goal?
If you are trying to rank your product, then keeping a lower price will usually help conversions and Amazon ranking.
If you are trying to maximize profits then you need to try to use a higher than average price to get the maximum margin but without a large drop in unit sales.
If your product is already ranked near the top of your category, then you can use a premium price and sometimes this will skyrocket sales even further.
It’s best to test new prices every 1 to 3 months as the market shifts over time, especially during key seasons like Christmas and Black Friday.
