Amazon FBA Pricing Strategy for Newly Launched Products

Summary

In this video, the co-founder of Your Seller discusses a pricing strategy for successful Amazon product launches. The model suggests starting with an aggressive price, significantly lower than the target, to incentivize buyers and gain early reviews. Gradually increase the price by 5-7% weekly to maintain buy box eligibility and organic advantage. The speaker advises against lowering prices during festive seasons, emphasizing that a good product with a solid rating will sell itself. For further assistance with Amazon product launches, viewers are encouraged to contact Your Seller.

Takeaways

• 📈 Start with an aggressive pricing strategy to rank higher on Amazon and gain organic advantage.
• 💰 Offer a price advantage for the first few weeks to incentivize buyers and build momentum for product success.
• 🚀 Launch the product at a significantly lower price, like $30 for a product with a target price of $50, to attract initial customers.
• 🔺 Gradually increase the price in increments of 5 or 7% each week to avoid losing the buy box and maintain Amazon's algorithm favor.
• ⚠️ Be cautious with price increases as Amazon's algorithm does not favor rapid price changes.
• 📉 Avoid significant price reductions during festive seasons as customers value quality over discounts.
• 🌟 High-quality products with good ratings will sell well regardless of price during high-traffic periods.
• 💡 The initial losses from aggressive pricing can be offset by long-term organic ranking and reduced advertising costs.
• 🛒 Pricing products normally and then discounting based on results can lead to unpredictable traction and higher advertising spends.
• 📊 Maintaining control over the initial losses allows for better profitability and organic advantage in the long run.
• 📧 For assistance with Amazon product launches or ecosystem-related needs, reach out to the experts at Your Seller.

Q & A

What is the main focus of the video script provided?

The video script focuses on a pricing model for successful product launches on Amazon, emphasizing the importance of strategic pricing to gain organic advantage and rank higher.

Who is the speaker in the video script?

The speaker is Chi, the co-founder of Your Seller, a team of Amazon experts who help sellers grow their business on the platform.

Why is pricing important for product ranking on Amazon?

Pricing is crucial because it has a significant correlation with how well products rank on Amazon, affecting their visibility and sales potential.

What pricing strategy does Chi recommend for new product launches on Amazon?

Chi recommends an aggressive initial pricing strategy, starting with a lower price to provide value and incentivize buyers, then gradually increasing the price in increments of 5 or 7% each week.

Why should sellers not price their products at par with the competition during the initial launch phase?

Pricing at par with competition during the initial launch phase is not recommended because new listings lack reviews, ratings, or proof of concept to inspire buyer confidence, and thus need to offer a price advantage to attract customers.

What is the recommended initial pricing period for a new product launch on Amazon?

The recommended initial pricing period is for the first three to four weeks of launching the product.

What is the maximum price increase percentage per week that Chi suggests to avoid losing the buy box on Amazon?

Chi suggests a maximum price increase of 5 to 7% per week to avoid losing the buy box on Amazon.

Why is it important to maintain a gradual price increase over a period of 8 weeks?

A gradual price increase over 8 weeks helps build momentum into conversion rates and positions the product for long-term success without losing the buy box or organic advantage.

What is the potential downside of not following the recommended pricing strategy during the initial launch phase?

Not following the recommended strategy can lead to higher advertising spends, uncontrollable product traction, and a longer period of lower profitability.

What is Chi's advice on pricing products during the festive season on Amazon?

Chi advises against lowering prices during the festive season, as customers do not necessarily see value in price reductions, and a well-rated product can sell well due to increased traffic and demand.

How can sellers reach out to Chi and Your Seller for help with Amazon product launches or other Amazon ecosystem-related issues?

Sellers can reach out to Chi and Your Seller by contacting them at [email protected] for assistance with Amazon product launches or other Amazon ecosystem-related matters.

Outlines

00:00

💡 Amazon Product Pricing Strategy for Launch Success

Shi Chi, co-founder of Your Seller, introduces a pricing model for successful Amazon product launches. The model emphasizes aggressive initial pricing to provide customer value and gain organic advantage. It suggests launching at a lower price, such as $30 for a product with a target price of $50, and gradually increasing it by 5-7% each week to avoid losing the buy box. This strategy is meant to build momentum in conversion rates and ensure long-term product success. The summary also addresses concerns about initial losses and the ineffectiveness of inconsistent pricing strategies, which can lead to higher advertising costs and longer periods of reduced profitability.

Keywords

💡Pricing Strategy

Pricing strategy refers to the method or approach a seller uses to set the price of their products. In the video, the pricing strategy discussed is crucial for successful product launches on Amazon. The speaker suggests starting with an aggressive price to provide value and gain an organic advantage over competitors, which is central to the video's theme of optimizing product ranking and sales.

💡Amazon Seller

An Amazon seller is an individual or business that sells products on the Amazon marketplace. The video is directed towards Amazon sellers, offering them advice on how to price their products effectively to ensure profitability and growth on the platform.

💡Product Launch

A product launch is the process of introducing a new product to the market. The video emphasizes the importance of a well-planned pricing strategy during the initial stages of a product launch to attract customers and build momentum for long-term success.

💡Buy Box

The Buy Box is a prominent placement on Amazon's product detail pages, allowing customers to add items to their shopping cart with a single click. The video mentions the importance of not losing the Buy Box by following a gradual price increase strategy, as Amazon's algorithm may penalize sudden price hikes.

💡Organic Advantage

Organic advantage refers to the natural, non-paid growth and visibility of a product on Amazon, often resulting from effective SEO and customer satisfaction. The video suggests that a strategic pricing model can help sellers gain this advantage from the start of their product launch.

💡Conversion Rates

Conversion rates measure the effectiveness of a product in converting views into sales. The video posits that a strategic pricing model can significantly improve conversion rates by offering customers an incentive to purchase during the initial launch period.

💡BSR (Best Sellers Rank)

BSR is a ranking system used by Amazon to determine the popularity of products based on sales velocity. The video suggests that maintaining a certain BSR level through strategic pricing can help sellers gain an organic advantage over competitors.

💡Festival Season

Festival season refers to periods with high consumer spending, such as holidays. The video advises against lowering prices during these times, arguing that customers value quality over discounts, and a well-reviewed product will sell well regardless of price adjustments.

💡Profitability

Profitability is the ability to generate profit from business activities. The video discusses the trade-off between short-term losses during a product launch and long-term profitability, emphasizing the importance of strategic pricing to maintain control over costs and revenue.

💡Traction

Traction refers to the progress or momentum a product gains in the market. The video warns that without a controlled pricing strategy, a product may struggle to gain traction, leading to higher advertising costs and reduced profitability.

💡Amazon Ecosystem

The Amazon ecosystem encompasses all aspects of selling on Amazon, including marketing, logistics, and customer service. The video offers assistance for navigating this ecosystem, indicating the speaker's expertise in helping sellers succeed on the platform.

Highlights

Pricing strategy is crucial for product ranking on Amazon.

Aggressive initial pricing can provide value and incentivize buyers.

Launching at a lower price can help gain organic advantage.

Example given: Launch product at $30 if target price is $50.

Incremental price increase by 5-7% each week post-launch.

Avoiding drastic price increases to maintain buy box.

Strategy builds momentum for conversion rates over 8 weeks.

Resisting aggressive pricing can lead to higher advertising costs.

Controlling traction and profitability with a structured pricing model.

Avoid lowering prices during festive seasons as it doesn't add perceived value.

High-quality products with good ratings sell well regardless of price.

Expert consultation on Amazon product pricing and strategy.

Contact provided for assistance with Amazon business growth.

Importance of maintaining a balance between pricing and profitability.

The co-founder of Your Seller discusses Amazon's pricing structure.

Amazon's algorithm does not favor rapid price increases.

The significance of a well-executed product launch for long-term success.

Your Seller offers help with Amazon ecosystem challenges.

Transcripts

if you are confused about how to price

your products on Amazon then in this

video I'm going to talk about a model

that you can use as a guide for

successful product launches so I'm sh

chi I the co-founder of your seller we

are a team of Amazon experts and we help

sellers grow their business on Amazon

and at the same time be

[Music]

profitable now there's a huge

correlation between how you are pricing

your products and how well your products

are able to rank higher up uh and we ADV

we use a specific pricing structure that

we recommend to all of our clients to

ensure that you ex extract the uh

organic Advantage from the very first

day of your product

launch basically the idea is to go

really aggressive at the start and

provide enough value to the customer

rather than pricing it at a price which

is at par with competition because it's

a naked listing at the end of the day

and you do not have any reviews or

ratings or a proof of concept uh that

would Inspire buyers confidence so the

idea is to incentivize the buyer for

taking that risk uh and giving that

price advantage in terms of value added

benefit for the first three or four

months for the first three or four weeks

of launching so for example if your

Target price is say $50 for your product

then I recommend you launch your product

at say $30 say for the first week

increase it to $35 for second week and

then then do it in increments of 5 or 7%

each week uh this will ensure that you

do not lose your buy box and at the same

time uh you have to understand that

Amazon's algorithm does not appreciate

price increases so uh make sure that you

abide by the 5 to 7% price increase per

week rule or else you will run the risk

of losing your buy box so a strategy

like this followed over a period of 8

weeks can really build a lot of momentum

into your conversion rates and place

your product for a much more longer term

success now a lot of times sellers do

resist this strategy because of the

losses that you end up incurring at the

start of your product launch uh and they

would want to price their product at a

normal price then basically discounted

depending on whether they are able to

get the expected results out of them or

not the problem with this strategy is

it's it's it's all over the place and it

is haire and you are not able to control

the traction that your product is able

to get which will result in higher

advertising spends also and will make

sure that your profitability basically

goes for a TOS over a longer time frame

now this is a much bigger loss than the

loss that you incur saybe in the first

few weeks of your product launch because

then your tacos will be in control and

you will be able to gain that organic

Advantage from competition because your

BSR will always be at a certain level um

a lot lot of the times we also get asked

this question of how to price the

products during say uh the festival

season all the holidays now I can't

stress this enough but I've never

suggested my clients to basically go

down on price during the festive season

because the customer does not see value

in that um at the end of the day if your

product is good has a fourstar rating uh

then whether you increase the price or

not it is still going to sell for itself

because of the humongous amount of

traction and traffic that is going to

come into those days so these are the

kind of things that we basically consult

with our clients on uh so if you want to

launch your products on Amazon or need

help with anything that is within the

Amazon ecosystem uh then do reach out to

us on contact at

your.in and we'll be happy to on board

you as a client I hope this was helpful

thank you for watching

[Music]

cheers