3 Ways to Test Amazon Pricing Strategies: Put Your Mouth Where Your Money Is

|30th May 2019

I’m going to explain how you can use your pricing on Amazon to more effectively speak to your target audience and increase both click-through and conversion rates, and potentially even profit margins as well.

No, the title isn’t a typo. Everyone knows that keeping your pricing competitive is key to success on Amazon, as well as running attractive promotions, but is there more to it than that? I’m glad you asked, because yes there is.

 

#1 – Promotions

Use vouchers to create more eye-catching listings in the search results. With ‘cross-out’ prices now reserved for best sellers you can’t rely on using a sale price to show customers that you’ve got a deal on offer.

When you are running a promotion, use a monetary discount rather than a percentage discount for lower priced items. The reason for this is that it’s much quicker and easier for a customer to quickly scan a listing and do simple subtraction, rather than work out the percentage and then subtract from the price.

Also, where possible use multiples of the price as the monetary discount. For example, £4 off a £16 product. Everyone learns the times tables in school, so again, this makes the price calculation process quicker and easier for a potential buyer.

 

#2 – Free Delivery

If you have products priced just below the free delivery spend threshold, consider nudging them up a touch so they qualify. This can have three positive outcomes.

1) If a user filters the search results by ‘free delivery available’, you remain visible. Additionally your listing will have an ‘eligible for free delivery’ label.

2) Once you combine the price plus the additional cost of shipping, your new price may actually be cheaper overall for the customer, making it more attractive.

3) Dependant on how much you increase the price by and how you ship your products, this can result in a higher margin on the product for you, which would combine nicely with the increased conversion rate you (hopefully) see from offering free delivery.

 

#3 – Luxury vs Bargain

It’s a well known retail tactic. You set your price at £29.99 rather than £30 so that as a buyer glances at a price tag, all they really process is 20-something instead of 30-something, tricking their brain into seeing it as a better deal.

Depending on how you wish to position your product and brand, you might be better off sticking to round numbers. More price motivated consumers will see the .99 price as a better offer, and if that’s your aim, go for it, it’s still a perfectly valid tactic.

However, if your products are positioned as high quality, luxury items, you may want to steer clear. A 2015 study by Kuangjie Zhang and Monica Wadhwa found that whole numbers in prices are processed more fluently and encourage reliance on the customer’s emotions to make the decision, which in the case of many luxury items is much more likely to be your angle, rather than being the price competitive option comparative to similar products.

 

Competition on Amazon

My caveat to all of the above is that if you currently own a competitive buy box, testing different prices is not the best idea. On competitive listings, price will often be the determining factor in who wins the buy box, so if you’re already on to a winner then it shouldn’t be a candidate for testing different pricing strategies.

So there you have it, three different ways you can use pricing to better attract customers and improve sales that don’t involve simply dropping prices to get traction for a product on a highly competitive platform.

Read more about our Amazon Advertising services here and if you’re interested in exploring how these strategies can help your business, get in touch with our team for an Amazon Advertising audit.

 

Written by Alec Burns, our Lead Amazon Strategist

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