10 Amazon Pricing Strategies with Examples

Did you know that 82% of Amazon sales are from products that have the “Buy Now” button on their Amazon product page? If you are a seller on Amazon, you need to know this. You will also want to know the most powerful Amazon pricing strategies so you can sell more.

I’ll quickly review the 10 best Amazon pricing strategies in order, starting with the most effective, and provide tips and examples so you can decide which to use.

1. Getting the “Buy Now” Box (aka Buy Box) Strategy

Have you seen the dark orange “Buy Now” button on the right side of your screen after you click on a product? It’s the button below the light orange “Add to Cart” button. That is one powerful button.

Having that “Buy Now” button on your product page is the #1 best thing an Amazon seller can do to boost sales. But you can’t just do it. You have to apply for it and be approved.

Example: To even be eligible, you have to have a professional (not individual seller) Amazon account (currently $39.99 per month) and be selling a new (not used) product. You will want to use the Automate Pricing Tool on Amazon to set your price to be close to or better than the current Buy Box price. Make sure that you always have enough inventory to fulfill your orders, or your chances of winning the “Buy Now” button on your product page will decrease.

If your business model supports it, sign up to be a Fulfillment By Amazon (FBA) seller to increase your chance of getting the button. Additional factors influencing whether Amazon will let you have the “Buy Now” button are the speed of your shipping, the quickness of your responses to buyer questions, and how competitive your pricing is.

Pros & Cons: You’ll have great sales, but you’ll need to consistently have a great product, shipped fast with excellent customer service.

Amazon Tools: Amazon provides the Automated Pricing Tool to help you set rules to win the “Buy Now” button, but you have to implement the overall strategy and tweak it on your own until you win that coveted dark orange button.

2. Dynamic Pricing Strategy

People want to buy more of certain things at certain times, whether it is seasonal or a market trend. Part of the reason is that people don’t tend to plan too far ahead (ever seen the crowd of last-minute Christmas shoppers?). Another part of the reason for this is children – you won’t buy a Christmas outfit for a child too far in advance, because it might not fit them when it is time for Christmas.

Sellers know this, and so they will charge more when more people want to buy the item, and less when fewer people want the item. After all, if you want that cute Christmas outfit for your kiddo’s second Christmas, you are not going to wait until it goes on sale in March.

Example: Sticking with our Christmas example, ugly Christmas sweaters will generally cost more at Christmastime than at other times during the year. Easter baskets cost more before Easter than after. You get the picture.

Pros & Cons: This approach helps maximize profitability but can lead to price wars where all the sellers end up losing profit margin.

Amazon Tool: Automate Pricing Tool.

3. Competitive Pricing Strategy

This is when a seller monitors their competitors’ offerings, including pricing, value, quality, and anything else that comes packaged with the product or freebies. When the sellers see competitors matching or undercutting their pricing, they then adjust their pricing lower. This could be through an actual price reduction, or by adding a freebie for the same price.

Example: Seller A sees that Seller B sells a similar baby doll for the same price. Seller B includes a baby doll’s bottle with the purchase. Seller A decides to include a baby doll’s bottle plus a baby doll’s blanket with Seller A’s baby doll.

This makes Seller A’s baby doll cheaper than Seller B’s because you get the doll plus the bottle plus the blanket for the same price as Seller A’s doll and bottle.

Pros & Cons: Undercutting competition is a high-risk strategy that leads to more sales from price-sensitive customers, but it also cuts into margins, where the seller is making less money from each sale and needs to make up for it in volume. (That’s the grocery store model.)

Amazon Tool: Automate Pricing Tool.

4. Value Based Pricing Strategy

Value-based pricing is when a seller attempts to offer something that seems to be worth more for some reason, perhaps quality, being eco-friendly, or having artisan craftsmanship.

Example: Seller A’s product is a hand-forged knife that uses the ancient knife-creating art of the Japanese samurai, passed down from generations, to create each knife over a number of months and carve the knife artisan’s name into the blade.

Seller B’s product is a knife manufactured by a machine somewhere with no detail or notable quality other than being sharp enough to cut vegetables.

Pros & Cons: Value-based pricing means your customers want the quality of what you sell, and you can get higher profit margins out of those customers. But you first need to have a solid company reputation and loyal customers who believe in your brand.

Amazon Tool: None, as it is based on a seller’s and a buyer’s perception and the price will need to be manually set by the seller.

5. Algorithmic Repricing Strategy

Sellers can set their pricing to change based on “rules” that they set, such as the Automate Pricing Tool’s “Match Low Price feature.”

Matching the lowest price is one of the most popular rules because sellers can be hands off, and still ensure that their pricing is the best for cost-conscious consumers.

More buyers will typically purchase items that are more competitively priced, and this pushes up the statistic for how many people purchased the item in the last month.

Personally, if I were choosing between, for example, paper plates to buy on Amazon and my options all seemed to have good ratings, I would feel more comfortable with paper plates that listed “4K+ bought in past month” versus listing nothing at all, or listed a small amount such as “100+ bought in past month.”

Example: A reseller of a Super Mario Bros. video game sets a rule with the Automate Pricing Tool to slightly undercut the prices of their competitors on an ongoing basis, ensuring that the seller offers the lowest price for the game.

Pros & Cons: Using algorithms is fast because it is automated, but because it is technology, it can also be glitchy.

Amazon Tool: Automate Pricing Tool.

6. Automated Rule Repricing Strategy

Again using the Automate Pricing Tool, sellers can set a minimum/maximum price rule according to certain conditions. This means that they are automatically keeping their product’s price within a price range, to be cost-competitive but not cut into profit margins.

Example: A seller of natural baby hair and skin care products could set rules so that the prices of the products are lowered when their competitors’ prices are lowered, but not lowered below a floor to ensure that minimum production costs are covered.

Pros & Cons: Automation saves time compared to a manual repricing strategy, but you have to have enough foresight into changes in market demand to be able to program your automation out into the future.

Amazon Tool: Automate Pricing Tool.

7. Positive Perception Strategy

A brand’s quality, reputation, charitable reputation, longevity, and customer service factor into how buyers view a company. When buyers think highly of a company and believe in the integrity of their products, the company can charge more for their products.

Example: An 8 oz. jar of the original ayurvedic mustard seed powder blend sold by a “doctor” whose company was established in London in 1961 can sell for $16, while one by an unknown person on Etsy sells for $5. (FYI, I did actually buy it for my wife for $16.)

A pair of 6.5-7mm pearl studs with white gold studs and backs from Tiffany & Co. costs $580. A generic pair of the same on Amazon from “The Pearl Source” costs $59. I know my wife wants to see that iconic robin egg blue box from Tiffany & Co., so I should be a good hubby and buy the expensive pair.

Pros & Cons: Having a strategy based on brand reputation and loyalty is power but takes time to build. Once a strong brand is built, the brand can charge oversized margins. However, the brand must be consistently vigilant in addressing negative reviews and the consequent reputational damage, which may be difficult to control.

Amazon Tool: None, but the seller can use positive reviews on Amazon to support its longstanding reputation.

8. Urgent Pricing Strategy (Black Friday, Holidays, Prime Day)

Most everyone knows when Black Friday is coming (hint: the Friday after Thanksgiving Day), Cyber Monday (the Monday after that), or when Christmas is coming. We anticipate it, and we wait for the sales because we want to get a good deal.

I tend to think of myself as a rationale individual who doesn’t generally overpay, but whether it is a good deal or not, a big label with “BLACK FRIDAY SPECIAL” makes me so eager because of the FOMO that I end up trying to do all my Christmas shopping on Black Friday.

Example: Amazon pre-announces some Black Friday specials to stir up the shopping frenzy of hungry deal seekers, and then uses countdown clocks on its site on Black Friday to remind people that if they don’t buy now, they will miss out!

Pros & Cons: Customers expect deals on special occasions and often wait to buy until those special occasions, so sales will likely get a boost. Depending on how far the seller has to discount to generate interest, profit margins will suffer.

Amazon Tool: Sellers can submit deals through their Deals Dashboard inside of their Seller Central account.

9. Economy Pricing Strategy

The way to think about “economy” pricing, is cost plus. In other words, sellers are going a bit above what it costs them so that they can sell a lot of products.

Example: Generic vitamins are a great example of this. No frills, no brands. Just the basic vitamins.

Pros & Cons: Having the cheapest pricing will help sales, but will likely be with products and services with low barriers to entry. This means lots of competition, and low profit margins that rely on volume.

Amazon Tool: You can use the Automate Pricing Tool to set a small margin on your product, or set prices manually.

10. Manual Repricing Strategy

Manual Repricing is a variation of the Competitive Pricing strategy. The goal is the same, but with the Manual Repricing Strategy, you are not using the Automate Pricing Tool in Seller Central to adjust your prices when you find that you should be charging less or could be charging more in response to your competitors’ pricing.

Example: A small business with a physical store in one location sells most of its products locally and has just started to sell one product on Amazon. It is testing out Amazon, and doesn’t know Seller Central very well yet.

The small business seller chooses to manually reprice because it is easy for that one item. Later, if the seller’s Amazon sales are successful enough and it decides to sell more on Amazon, it may learn how to set rules to automate pricing changes.

Pros & Cons: With manual repricing, the seller has full control and can change pricing based on their insights into market dynamics. Because it is manual, it is more time-consuming than automated repricing and could be done less often than needed due to time constraints.

Amazon Tool: The price is set manually.

Conclusion

Amazon provides many tools for sellers to explore pricing strategies and maximize their sales. In addition to the strategies above, the Automate Pricing Tool also offers the Business Competitive Featured Offer Rule (to price to be competitive with the sellers who are winning the Featured Offer), the Sales Based Pricing Rule (to price to sell a certain number of units for a certain price in a certain period, and then set a new price), and the Competitive External Pricing Rule (to price to sell lower than a price for that same item found somewhere other than Amazon).

As we’ve explored, there are also some strategies sellers can implement on their own, which are not offered inside Amazon for sellers. Regardless of which you choose, I hope this explanation of the various options has been insightful and will help you maximize your profit margins.