FBA Pricing Strategy
I’ve sold over 140,000 Books, DVDs, and CDs on Amazon FBA over the last 5 years. During this time, my pricing system has been pretty basic. I usually just match the lowest-priced seller and add the shipping costs.
However, with more and more FBA sellers entering the game, I think dynamic pricing is becoming more and more important. After all, I spend a lot of time (and money) getting inventory, preparing it, listing, labeling, and shipping it out to Amazon FBA. I obviously want to get my money’s worth.
This is especially true when an item has no other FBA sellers. I really haven’t been taking advantage of this much. How much higher can I sell an FBA item…20 percent, 30 percent?
These FBA pricing experiments are a great opportunity just to see how valuable the FBA program is.
For example, I stopped at a local thrift store after visiting downtown Durham, NC. I went to see the Durham Bulls play (made famous from the great 1988 Kevin Costner movie, Bull Durham).
And I found well over $500 worth of Books and CDs (I paid $60 for them).
Plus, I found this gem…
…A nice $100+ book with no other FBA sellers.
Right now, my pricing strategy for FBA items (with no FBA competition) is:
1) Average the lowest five items
2) Add shipping costs
3) Add a 25% premium
4) Then add an extra $2 for good measure
That makes a total price of $140.26 for this book. We’ll see how long this takes to sell. My guess is 2-3 months.
Here’s the listing on Amazon.
I have a similar strategy on pricing higher but only on books ranking under a 1M. I will go 30% on <100K ranked, 25% on 100K-500K, and 10% on 500k to 1M. On the $100 book I would price it to sell cheapest since you can get a new one for a lot less and it is very slow moving book. Sometimes plopping it in there at under $100 will generate some instant demand and what the heck I usually only paid a 1-2 bucks anyway.
That’s a good pricing method. I will probably experiment with the rankings soon as well.
Hi Nathan,
Thank you for all the great information you provide. I’ve been following you for a while now and I always find your information very helpful. It was your free ebook that got me into FBA selling, and now I am doing very well with it.
I have a question about your pricing strategy. You state that you use this strategy when there is no oteher FBA competition. What if you are selling a New book (or video or toy or whatever) and there is no other FBA competition selling new, but there are FBA sellers selling Used? Do you take that into account when pricing a new item, or do you ignore the used sellers altogether. I ask this because I currently have a lot of new items that are listed at prices much higher than the used prices, and I wonder what kind of difference this makes. Any thoughts you have on this would be appreciated.
Thanks again.
Jim
My pricing strategy is different, but it would have gotten to a similar point with this book. When there are several offers, I like to price myself somewhat below the higher-priced sellers but definitely above the lower-priced sellers.
Hi Jim,
If I’m selling a new item, I pretty much ignore all the used offers (even the used FBA offers).
Nathan
Phillcalle,
Yes, I agree. Especially since there are only 14 offers for this book. I think pricing somewhere in the middle is a wise strategy.
Nathan
What does offers mean?
Pricing is extremely important on Amazon. It’s almost like a game of chess
What is your pricing strategy if you have FBA competition?
Sometimes I match the lowest FBA price. Sometimes, I ignore the FBA sellers, and price based on the merchant fulfilled sellers. I’m always changing my pricing strategy and trying new things.
Nathan,
I am trying to develop my pricing strategy, both when there are no other FBA sellers, and also when there are. In the above post, you gave your 2012 strategy when there are no other FBA sellers. Are you doing something similar today?
Also, when there are other FBA sellers, are you averaging the lowest 4 or 5 or something, or coming in near or at the low?
I would absolutely love to read an updated post on your pricing strategies in both cases, as well as how you use a repricer to implement them! I’m sure this would be of great interest to a lot of other readers also.
Thanks again, especially for your help for everyone.
Scott
Thanks for
From my experience, it’s really hard to automate the pricing for listings with no FBA sellers. Amazon changed their API formula that they give to 3rd merchants. As a result, the repricer’s don’t have access to all the data. If there are FBA sellers many pages deep in a listing, The 3rd party apps can’t access it.
I keeping my repricing simple these days. I usually match the lowest price (FBA or FBM) for my condition. Sometimes I will add an extra 10-20%. I have a minimum price of around $10.
Hello Nathan,
Was wondering your opinion on how important it is to be on the Top 3 listings for a given book? Do you take that into account or do you just focus dollar amounts?
I assume it depends on the Sales Rank. For me, it is important to be one of the Top 3 choices to get a sale. It’s less important to do that for products with good rankings because those Top 3 listings will likely sell out soon so you can price higher and focus on chasing margin. If it is a bad ranking then you should chase the sale and go for being one of the Top 3 listings.
Please let me know what you think!
Hello,
I normally match the low price for my condition, and I also ignore sellers with a feedback below 95%. This usually gets me withing the top three. One of the problems of pricing higher with good ranked items is that Amazon is usually selling it. So, I can’t get away with pricing it too high.
When you say, Top 3 listings, do you mean Top 3 of All Conditions or Top 3 of the listings with the same conditions?
Also, do you have a criteria for sourcing books based on the amount of FBA sellers you’re competing against? I am more than likely to run across books that have lots of FBA competition and therefore a higher chance of having to deal with sellers undercutting me which is annoying. The obvious solution would be to only source books with little to no FBA competition but that seems to be hard for me to do.
So how do you handle these concerns?