Remember, the key to having a successful product listing is to position your product on ground where you charge a reasonable price, generate a decent profit while still retaining a good customer base. Having the wiggle room to offer promotions from time to time is necessary as well.
Here are our 5 guidelines for setting the price for your product:
- Price Your Product at Least 50% Above Your COGS (Before Marketing and Giveaways)
- Don’t Start a Race to The Bottom
- Use Your FBA Competitors’ Price as Benchmark
- Consider Supply and Demand
- FBA Add-On Items: Don’t Set Your Price too Low
1. Price Your Product at Least 50% Above Your COGS (Before Marketing and Giveaways)
2. Don’t Start a Race to The Bottom
If you employ this strategy too often, buyers will begin to associate your products with a cheap price instead of it being competitively affordable, and it will quickly become a race to the bottom. Don’t get caught up in a race to the bottom. Your product might be a cheaper alternative to the master brand but it shouldn’t be the cheapest product in your category.
As a private label seller, you most likely don’t have the lowest cost structure to sustainably hold the lowest industry market prices. So focus on building your brand equity by delivering on your product’s incremental benefits and differentiating features that solve an outstanding problem in the marketplace and you’ll be able to earn a premium for your efforts.
3. Use Your FBA Competitors’ Price as Benchmark
See the price of the top ranked positions and assess at what price point they can offer their product without seeming to impact their sales volume. Sales volume can be seen in Unicorn Smasher, so go back to your dashboard and check the saved searches you did. Refresh them now to see updated data. Often customers associate a higher price with higher quality, so this should work in your favor. But don’t price yourself out of the market either.
Buyers are trained by Amazon to look for FBA sellers so that they can cash in on their Prime membership. They love to know their purchase will get 2 day shipping so FMB sellers are not really in the race. However it is something to also look at, just factor in the cost of shipping on top of the product price.
4. Consider Supply and Demand
5. FBA Add-On Items: Don’t Set Your Price too Low
The price cutoff for Add-On items seems to differ between categories, so you might find that it takes some trial and error here. If you followed our recommendation, then you’ll have chosen a product over $20 and therefore you should have no issues with this. Add-ons seem to be around $12 for most categories or $7 for others. Either way, you should be well clear of this, it’s just a point to note.
Pro Tip: Also it’s important to consider that $49 is the threshold for free shipping for Non-Prime buyers. Therefore $48.99 is actually a worse price than $49.01 for the buyer.