In the “Inventory Rich, Cash Poor” blog post I explained a few pricing strategies for helping your items sell sooner than later. Here I add to that a bit by explaining the different types of Amazon sellers and buyers as well as some different pricing options.
Please keep in mind that the majority of items I sell are “one-of” items that I find at thrift stores. This effects how I choose to price my items since, for the most part, they are not easy to replenish. Also, many of my items are “long-tail” which means I will be waiting for the right buyer to come along. They are not necessarily the latest hot, popular items that everyone is clamoring for. Likewise, they usually do not have the competition that a “hot” item will have.
Also, please know that I generally do NOT compete with Merchant Fulfilled offers. I am focused on attracting the Amazon Prime buyer or those who want Free Super Saver Shipping – for more about this, check out our article about the “Magic 25” and listen to the Podcast about the Magic 25 HERE.
Before we get into pricing, you need to understand the different types of sellers and buyers on Amazon. Who you are competing with and who you are selling to.
Understand the different kinds of sellers on Amazon
- Amazon themselves sells items.
- You’ll see “ships from and sold by Amazon” along with the Amazon.com logo in the product listings.
- FBA (Fulfilled By Amazon) Sellers
- These are sellers who have their inventory stored at Amazon’s warehouses and shipped by Amazon.
- Looks simlar to items sold directly by Amazon but with the particular seller listed.
- Merchant Fulfilled Sellers (MF)
- These are sellers who have their inventory at their own location. They make the sale of the item through Amazon but then they ship the items to the customers themselves.
Understanding the different kinds of customers on Amazon
- Bargain Hunter Buyers
- They will often purchase lowest priced item no matter who is selling it.
- They don’t necessarily strive to get “Free Super Saver Shipping”
- Free Super Saver Shipping (non-Prime) Buyers
- This would mean that they are focusing on buying items that are “eligible” for Free Super Saver Shipping (sold directly by Amazon or FBA) – Merchant Fulfilled items do not apply.
- Prime Buyers
- Focus on buying items that are available for Prime shipping – 2 day shipping and 1 day shipping available too.
- These are items that are sold directly by Amazon or FBA – Merchant Fulfilled items are not eligible.
- Prime customers can select to ONLY SEE Prime/FBA offers. This is a HUGE advantage to the FBA seller.
Why items available from Amazon’s warehouses (FBA and offered directly from Amazon) are preferred by many customers
- Items are shipped by Amazon themselves which is VERY reliable.
- Packed well, shipped promptly and tracking provided.
- FREE 2-day shipping for Prime Members
- 1-day shipping available for many items
- FREE Super Saver Shipping for any non-Prime buyer who purchases $25 of eligible items.
- Easy returns
- (almost) instant gratification
- When a customer has more money than time they are willing to pay more to have the item they want sooner.
- Not everyone is a bargain shopper
Now that you understand the different Amazon sellers and buyers, lets talk about pricing options for FBA sellers.
One of the most important things to remember is:
Just because you may be a “Bargain hunter” does not mean that your customer is.
Eventually you will learn to ignore the voice in your head that says “someone will never pay $XX for THAT!”.
Some Pricing Options for Amazon FBA Sellers
When I make pricing decisions I look at:
(Again, let me repeat – I am listing “one-of” items that I find at thrift stores. If I was selling the same “hot” products that everyone else is and had lots of competition then my pricing strategies might be different. Likewise if I was selling quantities of items I was purchasing through wholesale sources.)
- Is Amazon selling the item themselves?
- If they are, then I usually match Amazon’s price or go a little lower.
- I also have the option to go over Amazon’s price. This “could” be a good strategy when Amazon’s item is priced a bit lower than $25. Go for that $25 price point and get the non-Prime buyers who want Free Super Saver Shipping. Read more about that in our “Magic 25” article and listen to the Podcast about the Magic 25 HERE.
- How many other FBA sellers are there? No FBA sellers, a few or tons?
- If NO FBA sellers then I am doing a little happy dance. This means that when the RIGHT PRIME buyer comes along looking for my usually long-tail item, then I “should” get the sale. And, because I’m selling FBA and am the ONLY FBA seller, I can price a bit higher than any MF sellers.
- If there ARE FBA sellers I need to stop and think for a minute. Remember that I’m selling a lot of “one-of” items that are usually long tail, so I’m waiting for that right buyer to come along. There might not be tons of buyers beating down the door to purchase this item. So, the question becomes….can I compete with those other FBA sellers? Am I willing to wait a while longer to have my item sell? For me, this could be worth it if the item has a high price tag and there are only a few FBA sellers.
- What prices do the other FBA sellers have their items at?
- Can I price my item somewhere within the first couple of FBA offers and still make the profit I would like?
- What prices are the MF sellers priced at?
- I know I said earlier that I don’t compete against MF sellers – and I don’t, but if I see tons of MF sellers with the same item for $0.01 + shipping then I may reconsider listing my item at all. It very well may be a dud.
- On the other hand, if I see high MF prices then I know I’ve probably found a winner.
- Lastly, I will look at rank as it is only an indicator of previous sales and not a guarantee of a future sale.
- Do I want my item to sell quickly for less profit? Then I might:
- Keep in mind that with “long-tail” items, there might not be a quick sale no matter how low your price is. What you can aim for in that case is to be first in line to get the next sale when the right buyer comes along.
- Match or go slightly over the lowest FBA offer.
- If no FBA offers, then price a few dollars above the lowest Merchant fulfilled offer, or match one of the lowest Merchant Fulfilled offers (including shipping).
- Or am I OK with making more money and it taking longer to sell?
- Price it higher than the lowest FBA offer.
- If no FBA offers, then price it higher than the lowest Merchant Fulfilled offer.
The “Magic 25” price point may be appropriate for either of these situations.
How do I KNOW what to price my item at?
You take a look at the info you have available and you make an educated decision based on all of the above info AND your personal preference.
Remember – you can always lower a price, but once it sells, you can’t raise it.
On the other hand… that lower price could get you a quicker sale than waiting for it to sell at a higher price.
Some Pricing Tips
- Avoid choosing a price that is below the lowest offer (MF or FBA). Choosing a lower price can set off a downward spiral of prices from people who use automatic repricers. This could also happen if you exactly match the lowest price.
- Repricers are a wonderful tool, should you choose to use one, make sure you know how to operate it properly. I am still learning how to use mine correctly.
Do you have questions about pricing your “one-of” FBA items? We invite you to ask them in our Free Facebook Group HERE. (Not a member yet? Just click the “Join” button on that page and we’ll add you ASAP).
And, of course, you are welcome to post comments and questions below too!
Wishing You Profitable Pricing!