What is the best pricing strategy for private label sellers to crush the competition? Not knowing the right answer has what resulted in killing the Amazon adventures of many sellers faster than they thought.

It is a complicated subject because different products demand different strategies so that they can both please the customers while making some profit. However, if you ask us, your pricing tactics for private label selling must be dead simple that should lead with your target audience in mind.

The goal of creating a pricing strategy is to generate as many sales as possible while getting authentic feedback and reviews from the customers.

This is extremely important because when you are running a private label business, you are competing with tons of other businesses. So, in order to remain competitive, you need to plan a strategy to lure customers away from huge brands.

In this post, we will be discussing exactly how you can lure your customers to your marketplace. These 15 pricing tips that we are going to discuss will help you get started with using and understanding private label pricing strategy.

#1 Set your prices for Page One on Amazon

For the products you are selling on Amazon, you need to consider the following two variables:

  1. You want to maximize your profits – for that, you need to identify your highest price possible
  2. You want to be profitable – for that, you need to identify your lowest price

This is an essential step because the majority of sales on Amazon happen on the first page of the organic search. So, you need to consider all of your costs and what would be your prices be for determining your profitability on Amazon.

First, you need to calculate the floor price, and second, you need to determine the upper price.

Calculating your Amazon Floor Price:

In order to operate in the safe zone, you are required to know all your costs. This includes:

  • Amazon FBA Fees
  • Amazon Commission
  • Payment Wiring
  • Customs
  • Shipping
  • Customer Return Fees
  • Your return shipping, disposal, and product wire-offs costs
  • Variable Overhead Allocation Costs

Finding your Amazon Upper Price:

You need your products to stay on page one of Amazon search. For this, you need to consider the competition around you. It is easy to accomplish. All you need to do is-

  • Search the top three keywords for your products and analyze the pricing on page one of the search results
  • Next, determine whether your prices are within a reasonable range as compared to your competitors’ pricing
  • That is, suppose if $30 is the highest price you found on page one. Your upper price can go from $38-$40.

#2 Price Elasticity Based on Demand

Price elasticity is used to measure the elasticity or responsiveness of a product’s quantity demanded in order to determine whether to change its price or not.

In simple words, it demonstrates how your product’s demand change based on an increase or decrease in its price.

That is, if you raise the price, your revenue will increase, and if you lower the cost, your income will decrease.

So, as your revenue grows, you need to price your products higher to accomplish the profitability.

Consider the example to better understand what we are trying to covey.
2100 units x $24 = $50,400
1900 units x $27 = $51,300
1600 units x $34 = $54, 400
1100 units x $37 = $40,700

From the given example, you can see that with the ideal price of $34, you can achieve the highest revenue. The best part about ideally pricing your product is that you can generate high revenue by selling less units.

#3 Take Advantage of Sales and Deals

A good deal is what customers are looking for when online shopping. Customers will spend more money than they anticipated if it means they can also save more. This thing may sound like a debatable topic given that you are lowering your prices to make more money. However, science backs the claim that sales and deals generate more revenue.

That is, participating in sales like Cyber Monday, Black Friday, Christmas, Labor Day, and other holidays will make a lot more customers interested in researching and buying your products. As more and more sellers will be participating in such deals and sales, you can analyze their pricing strategies to determine yours.

Read More About Amazon Selling:

#4 What to Do When My Product goes Out of Stock

Many internet marketers and sellers will say that going out of stock is a great thing because it shows that the demand for your product is quite high, that ultimately suggests that you are selling something useful. However, in our experience, running out of stock is actually pretty bad for private label selling.

Running out of stock means your competitors will take over your customers. So you need to plan your inventory levels ahead and ensure that you never go out of stock.

In case, if you somehow go out of stock, never increase your price too drastically to save the scenario. It will inevitably slow down the sales resulting in your inventory remain in stock.

But, if you are pricing too high, it will affect your product listing conversion rates, and you may also end up getting negative reviews from the customers.

So, if you think that you will soon go out of stock, intelligently hike the price, say from $15 to $20. This price hike is reasonable. But going from $15 to $35 makes no sense.

#5 1 Cent can Make a Big Difference

You may have seen your successful competitors offering products at $29.99 or $9.99. This is called ‘charm pricing.’ It can affect the conversion rates positively. The changes made in the left digit can make the whole difference and that too with only 1 Cent.

However, get this;

If you go from $21.90 to $21.89, it doesn’t make much of a difference. But if you go from $22 to $21.99, then it will grab the attention of your customers.

This tactic always works because our brains quickly encode the numbers before we finish reading the whole number. So, a buyer looking at a product priced $21.99 will only focus on the left digit, which is 21.

#6 Avoid Bundling Cheap and Expensive Products

This is the most significant aspect to remember when creating a pricing strategy. Never bundle cheap products with expensive products when selling as it will ultimately decrease the apparent value of the expensive product.

During a social experiment, people were offered to choose between a one-year gym membership and home gym. 51% chose home gym over a gym membership.

However, when people were offered a free DVD bonus to the home gym offer, the numbers drastically decreased to 35%.

It simply suggests that when selling an expensive product, you should never bundle it with an inexpensive product, as it will decrease its perceived value.

#7 Rounding Numbers
Rounding numbers can affect your sales. This is because rounded prices can be fluently processed while processing non-rounded numbers are complicated. It is all about numbers. For people making emotional purchases, rounded numbers are better. Moreover, as non-rounded numbers require mental power and more processing, they are great for buyers who make rational purchases.

So, you need to find whether your product is purchased emotionally or rationally. If it is emotionally purchased, you are better advised to avoid adding the cents. For emotional purchases, the prices should be like $10, $15, $20. And for rational purchases, you can add the cents like $10.99.

#8 Use External Signals and Brand Prices as Guidelines for your Pricing Strategy

Thoroughly study the competing branded goods when you are selling your private label. You need to decide whether you want to institute your private label as substitute/value brand by pricing below national brands or position it as premium and invest marketing dollars.

If your private label brand is positioned as substitute/value brand and its product features can be easily compared, you need to understand the price position of similar products, as it will help you position your product against other private labels/national products. If it is the opposite, the comparison is not easy, and you need to rely on customer reviews, web traffic, and ratings among others.

#9 You need to Understand the Category Differences

The buyers will always shop for features within a particular perceived quality subset when it comes to hard goods. For example, shoppers looking for cutting boards are looking for features, whereas shoppers shopping for soft goods like clothing and apparel are shopping for attributes like style, fabric, etc. The attribute comparison is what matters here, and the pricing will be completely based on that for your private label selling. You can position some of your private label products in the upper-middle segment for a specific category and build brand equity.

#10 Incentivize Buyers to Join your Marketing List

Building a loyal following is great for your private label business. You need to create a marketing email list that will help you stay in touch with your customers.

Serious Amazon shoppers always check the marketplace to see if there are any changes in the pricing to save some money. If you can inform the buyers about your special deals and price drops directly, you can get them interested in buying from you.

The best way to build a marketing email list is to offer an initial discount to buyers who sign up to join your list. This will tempt the buyers to avail your products, and if they are happy with your product and services, you can create a long-term relationship with your buyers.

#11 Know the Difference between Profit Margin and Markup

Profit margin is the amount/profit you receive after selling a product. It is determined by:

Profit Margin = Final Selling Price – Cost of Product

i.e; $100 (Final Selling Price) – $50 (Product Cost) = $50 (Profit Margin)

Markup, on the other hand, is the amount added to the product cost for getting the selling price. That is;

Product Cost + Markup Amount = Final Selling Price

$50 + $50 = $100 (Final Selling Price)

Profit margin is not the same as markup.

You need to understand the difference between profit margin and markup; else you will end up with bad accounting numbers.

#12 End of Month Discounts

Even before you plan your promotions, you need to know your potential buyers. Determine whether your buyers budget their expenses every month.

In most cases, buyers construct their mental budgets as per individual circumstances. For example, if your target audience is working middle-class people, they typically have monthly budgets. So it is an excellent idea if you offer discounts towards the month’s ends as it will help your buyers to get what they need without getting out of the budget.

#13 The Discounts you offer Must have a Reason

Buyers are more enthralled in buying products when they are offered in discounts. However, frequent and substantial discounts on your merchandise can harm the value of your product.

If you are discounting your products more often via external marketing strategies, you need to give a particular reason for offering the discount.

Frequent discounts will make people not buy your products because the buyers will perceive your discounted price as regular price. Hence, you need to give a reason behind your discounts so that you can fortify that the new price you are offering is unusual.

#14 Focus on your Product’s Benefits than Telling how your Price is Low

If you tell your buyers how your price is comparatively lower than others, they will not be interested in buying your product. Buyers are looking for an experience rather than buying cheap items. Surely, you can price your products low, but if you tell your customers about the benefits, they get when purchasing your product, they will be more interested in buying your product.

So, when writing the product description, ensure that you list all the potential benefits of your product. It will make buying decision easy for your customers.

#15 Manage Repricing

It is imperative if you are selling in a competitive environment or competing for the Buy Box. You need to develop a strategy that will regularly assess the prices of your competition while adjusting your rates accordingly. There are several options for managing repricing. They include:

  • Manual Repricing
    Manual reprising requires you to reprise your products manually. However, it needs you to regularly check your competitions’ pricing and adjust your pricing strategy accordingly.
  • Repricing Software
    You can use a repricing software that can help you monitor the prices based on the competition and automatically adjust the rates. If you are one of those sellers selling multiple products, repricing software can come in handy.
  • Automate Pricing in Seller Central
    Lastly, you can use Amazon’s Automate Pricing Tool in the Seller Central. It is similar to repricing software and lets you to set limits and rules regarding the repricing strategy and then automatically change the pricing when required.


Product pricing is one process that never ends. In order to remain competitive and remain in touch with your customers, you need to work on your pricing methods and strategies frequently. As your business grows, not only your buying power will increase but so will the facilities required, operating costs, and more.

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