How to Set Competitive Product Prices on Amazon

Decision making when setting product prices

Selling on Amazon entails great responsibility. With 1.9 million active Amazon sellers globally, the competition is really high. One of the challenges that Amazon sellers have to face is setting product prices to entice customers to buy and at the same time remain competitive in the market. As an Amazon seller, you have to consider what customers want plus your competitors’ price range.

There are many factors to consider before you set your product prices on Amazon. Read on for some helpful tips:

How to Assign Product Prices and Be a Competitive Seller

  1. Understand Profit Margin

Selling on Amazon does not only mean selling a required number of units in a given month. You have to factor the costs to maintain profits. If you’re a reseller, you should have researched the average price in the market and already come up with a minimum and maximum price for the product you want to sell and stay within these limits.

You also have to set aside a budget for your ads campaigns so that your products will be visible in the marketplace. Use Amazon’s FBA revenue calculator to help you with pricing your products.

The formula for determining your profit margin is:

Profit Margin = ((Sales – Total Expenses) ÷ Revenue) x 100 

As an Amazon seller,  your profit margin should be between 25% and 30% to ensure that you are gaining profits. 

Other factors to consider:

Use the rule of 3 when computing for costs: 

1⁄3 = fees

1⁄3 = landed costs (logistics, storage fees, taxes, inventory fees, shipping) 

1⁄3 = profit

  1. Set a Competitive Price Range

When setting a competitive price range, make sure that you do not devalue your products by pricing them too low. Even if they are new products, you should only set them a dollar lower than your lowest priced competitor. Present this to your target market as a special introductory price then slowly increase the prices as you get more positive reviews. 

The idea behind a competitive price range is to provide great value while still having a reasonable price. 

  1. Create an A/B Test for Different Prices

Run a split test campaign to determine which price your item sells best. This will also help you make data-driven decisions when it’s time to reprice your products. When split testing your products, list the same product with 2 different prices and let them run for at least a month. Compare the sales performance and determine which price generates more conversions. 

  1. Set your Product Price Above Amazon’s Free Shipping Minimum

Amazon Prime customers enjoy free shipping even when their orders fall below $25. Non-Prime members have to shoulder the shipping fee and that’s an additional cost of $5 to $10, which could prevent them from buying. Thus, set your product’s price to at least $25.99 so non-Prime customers get to enjoy free shipping and be enticed to buy your products. 

  1. Set a Business Price

Businesses can register as a Business Buyer which lets them purchase products for their business, tax-free. They are also eligible for bulk discounts. 

Set business prices so Amazon-registered Business accounts will be eligible for bulk prices and discounts. This move encourages large orders from commercial businesses. 

  1. Offer Coupons

Coupons are a great way to encourage your customers to buy your products. Amazon displays eye-catching coupon offers in your listings so this will increase the click-through rates and conversions. Tip: Slightly increase your price to $1 or $2 then offer coupons to compensate. Make sure to use Amazon’s FBA Revenue Calculator as a guide. 


Pricing products on Amazon is a complex process as it involves a lot of factors such as your competitors’ pricing, features, benefits, as well as cost of goods and other fees. Before sourcing a product that you want to sell, make sure that you have done your research so you can price your product competitively and retain its market value. Focus on your products’ unique features and share with your target market how it benefits them. 

Looking for a selling partner who can help increase your sales? Connect with us and we’ll be glad to help you out!

“The moment you make a mistake in pricing, you’re eating into your reputation or your profits.” 

— Katharine Paine, founder and CEO of KDPaine & Partners LLC, New Hampshire

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