How to increase prices on Amazon for brands and manufacturers selling on Seller Central is an important question to address as manufacturing, transportation, and labor costs increase. Raising prices on Amazon has a large impact on many facets of your business including buy box implications, the effectiveness of marketing, and variable selling costs on Amazon. If you as a seller do not have a pricing strategy or understanding of Amazon’s selling policies, it can lead to unintended consequences that can leave you frustrated with the marketplace and a worse experience for Amazon customers. Executing a pricing strategy that considers the implications of raising prices of your products on Amazon can allow you to continue doing business on Amazon profitably, and allow you to invest in more Amazon Ads or business development of new products to expand product selection for customers on Amazon. To understand more about how to increase prices on Amazon, this post will explore Amazon policies around pricing on Amazon, how to raise prices on Amazon, implications for raising prices on Amazon.
Amazon Policies around Pricing on Amazon
It is important to comply with Amazon’s policies around pricing on Amazon as you are selling on their marketplace. Below are links to key policies and tools around pricing on Amazon:
Amazon’s Brand Health Tool allows you to view your Brand’s offers with current or potential brand health issues along with your price, shipping, and competitive price on the tool
According to Amazon’s Policy on Reference Prices, The List Price you provide should represent the price at which you and other sellers are offerings the product.
Amazon Marketplace Fair Pricing Policy outlines that you must offer the lowest price in the marketplace on Amazon.
Amazon’s Pricing Health page provides an overview of your Featured Offer (Buy Box) eligibility, sales conversion, and any inactive offers with potential pricing errors
Implications for Raising Prices on Amazon
As you consider raising your product prices on Amazon, the main issue you could run into is losing the Buy Box. When raising your price on Amazon you must know that your product’s price must be as low as it is on your own website and any other marketplaces. If you have many distributors, you also must consider what price they are selling the product at, and match that or communicate with them for a standard price raise. Amazon’s Marketplace Fair Pricing Policy states that they strive to provide, “the largest selection at the lowest price”. When selling on Amazon you must price as low on the platform as you are priced elsewhere. If you raise your price on Amazon and a lower price elsewhere is detected, you will lose the Buy Box, making it difficult for customers to purchase your product. You will also risk a decrease in sales on the platform. Lower sales traffic can have further implications for your seller central account and can lead to excess inventory issues and a poor sell-through rate. It is important to consider this along with your competitors and the average market price for similar products when increasing your prices. An increased price may initially hurt your conversion rate, if the value is not being communicated to customers, with a higher price they will be less inclined to buy.
How to Raise Prices on Amazon
To update the price of your product on Amazon Seller Central, go to Manage Inventory. Then, locate the product you wish to increase. You can quickly and simply edit the price by typing your new price into the box in the ‘Price + Shipping” column and then selecting “Save” on the far right of the row. Another way to update the price is by selecting “Edit” on the far right of the product’s row on the Manage Inventory page. After selecting “Edit”, you can go to the “Offer” tab to view and edit your products' pricing. Here you can input your standard price, which is the list price of your product. Below that you are also able to input a sale price, which may be helpful to utilize when first raising a price, discussed further below. Input your new pricing and select “Save and Finish” below to update.
When you go to increase your product's price on Amazon, be aware that Amazon might have historical data on pricing that they are still referencing. An example of this is if you increase your products by $10 on your website and aim to increase it on Amazon the same day, you may face a Brand Health Error, which is a pricing error, and may lose the Buy Box. That is because Amazon may not be aware of the updated higher price in the marketplace, and is still referencing the low price previously on your website. For this reason, we recommend increasing your website price first if possible, such as a week before, so that there is more time for a new comparison to be set. Once your higher price is set, we recommend changing the list price of your product on Amazon to that. If you still receive a pricing error or lose the buy box, then a technique we recommend is to set a sales price for the time being and gradually increase that sales price by a few dollars a week until it matches the price on your website and you reach your updated listed price without Buy Box issues. The gradual increase of a few dollars a week may help prevent you from losing the buy box and sales, and it also helps customers ease into the increase if they were expecting your previous price.
As you consider the customer perspective, it may also be helpful to utilize coupons when first implementing a price increase. If your price increase comes after a long period of a lower price, some customers may be unhappy if they had expected a lower price. Use a coupon to partially discount off the updated price, perhaps for a month, so customers can become more comfortable with the new price.
Benefits of Raised Prices
The increased prices present an opportunity for companies to improve the customer experience on Amazon with more margin available to launch more Amazon ads and broader product offerings. A clear benefit to sellers of raising prices is an increased margin, which can help the company and in turn help the customers. With the increased margins Brands can keep up with supplier costs to stay in business, and invest more in Amazon ads and develop more products to best serve customers. When considering Amazon Advertising investments, the increased retail prices can also lead to a more efficient ACoS if bids remain the same. If there is a higher product sales price but the ad spend stays the same, Advertising will become more efficient. Increased prices can also help Amazon as Amazon’s referral fee will go up, resulting in more profit per sale.
Conclusion
Knowing how to raise prices on Amazon can benefit you as the seller by increasing your margin on each sale. It can also help Amazon by capturing more from the referral fee which is a percentage of your increased retail price and more dollars spent on Amazon ads. Amazon customers can benefit by sellers reinvesting this increased margin on new and improved products that expand the Amazon catalog. Increasing prices on Amazon requires an understanding of Amazon policies, implications for raising prices, and best practices for raising prices. If you have any questions on how to increase the list price for selling on Amazon Seller Central, please contact us using the contact button below.