Pricing Your Products Correctly
The pricing model that you have used on other sites is not applicable when it comes to pricing your product at Amazon. In all honesty, setting your price on Amazon isn’t quite the gamble that it can be on other sites. Your item will be offered at a fixed price rather than being up for auction, so there’s really no point in setting a price that will put you way ahead of your competition. As a matter of fact, lowballing is something Amazon sellers complain a lot about on the Seller Boards. Amazon seller Treebeard, who specializes in books, told us that on Amazon his prices can actually be higher than on eBay, because his item will stay up on the site for sale until the right buyer comes along. He has no need to try to time his sale in order to “catch “the right buyer. Experienced sellers agree that competing on price alone is not the way to build profits on Amazon.
As in any large marketplace, sellers come and go on Amazon. Inexperienced sellers sometimes just assume that if they regularly price their products below the competition, they’ll build a sustainable business. They feel that, as one seller told us, “On Amazon, it’s all about price.” But we feel that depends largely on the category. Obviously, the media categories are the most competitive. But what strategy should you bring to other categories such as jewellery or house and garden supplies? In those cases, some experienced sellers like Andy Mowery of dobro believe you should just wait out these lowball sellers. Although initially these sellers may get sales because of their lower prices, you shouldn’t then “follow them down to the lowest sustainable level. Who blinks first, when you can’t even cover costs? “he asks.
Again, other sellers feel that pricing is an area where you can gain a competitive edge, and some even use automated programs that adjust the price of their products automatically as the competition dictates. John Klassen of Music more sells some limited-edition records, exclusively vinyl. “I check the prices every time I upload a new listing to see if certain items are within reach of allowing me to be the lowest-priced seller, “he told us. The middle ground is best exemplified by Kathy of Element Jewellery & Accessories, who says you should price competitively— overpriced products will not sell.
Competition is ruthless—just take a look at all the booksellers pricing some books at $.01. Sellers who take this approach often use other aspects of their businesses to gain the competitive advantage. Eric of Vision decor recommends that you focus on doing what it is that you do better than your competition. “We focus on shipping faster and getting good customer feedback, “he told us. Eric reasons, “If we do that, the customers are smart enough to figure out and choose us over our competitors.”
Aim for the bell curve in prices. If a book is clustered on $9.99, and you come in at $8.99, just a tad under the median price, you will sell. Some prices are never going to be matched out. One cent or $99 books are outliers statistically. You cannot compete with that; don’t even try. Most of those are caused by automated selling programs, and are usually run by people who suffer quality issues when it comes to customer service. Usually, you will find you have only four or five real competitors in the same price range. Get to know them, check their inventory, read their comments and responses, read their websites if they have one, keep them in mind when pricing.
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