If you are a seller, it is very important to be price competitive to ensure you win the buy box. Customers constantly do a price comparison and having the most competitive / least price will improve the chances of a sale. In simple terms, changing the prices of products on Amazon's marketplace to ensure the buy box is not lost to a different 3P seller is the most important part of doing business on Amazon.
What is the Automated Pricing Tool on Amazon?
Amazon's automated pricing tool helps the sellers to automate the repricing at a SKU level. Sellers can create customised rules to manage their pricing. This automation helps sellers move their inventory fast by achieving sales volume while competitively pricing the products with total control of the buy box. Automating the pricing will give the sellers bandwidth to focus on other important aspects of their business and making the system reprice on Amazon.
How does it work?
For example, if you would like to ensure winning the buy box on a product, you can set a rule to “stay 0.01 cents below the buy box”. If another seller comes along and reprices their item to win the buy box, your Automate Pricing rule would kick in and reprice your item to 1 cent lower than the new buy box price.
You can create a pricing rule by defining rule parameters by setting the minimum price and maximum price for the SKUs on which the automated pricing can happen.
Competitive Featured Offer
This rule allows the sellers to set their price to be below, match, or above the Featured Offer. Repricing stops when they are the Featured Offer. This rule type is useful when multiple sellers are offering the same product.
Competitive Lowest Price
This rule allows the sellers to set their price to be below, match, or above the lowest price. If they are the lowest priced offer, Automate Pricing will compare their price to the next lowest price. This rule type is useful when multiple sellers are offering the same product.
Competitive External Price
The price of their SKU can match or be capped at the External Price. The external price is the lowest price for this item from other retailers and does not include prices from other Amazon sellers. The offer may be ineligible for the buy box if their price + shipping is greater than the competitive price.
Based on Sales Units
Sellers can decrease the price of their SKU based on the sales volume target that they select within a set period. This rule type is useful when sellers want to change the price based on their sales volume, e.g., liquidation of excess inventory or demand-based repricing.
How to create a custom price rule and select from various parameters?
From the Seller Central home page, hover over the “Pricing” tab and click on “Automate Pricing”. This leads to the Automate Pricing page which will show the predefined rules or any custom rules that have been created in the past.
To create a new rule, click on the ‘Create a Customised Rule’ button on the top right and proceed to select the rule parameters. This is where sellers can select the rule type they want to create (detailed in the above section) from the drop-down menu, give it a specific name to differentiate between other rules, and choose the marketplace the rule should apply to.
When selecting between buy-box, lowest price, and competitive price, Sellers are going to select the reference price they want their pricing compared to. If a seller chooses to create a ‘Competitive Buy-box’ rule, they can choose parameters like ‘Stay below the buy box by specified amount’, ‘Match the buy box price’, or ‘Stay above the buy box by specified amount’.
Once the sellers select all the parameters that suit them and save the rule, they are redirected to a page where they can add/enroll SKUs to this specific rule. Here sellers can give a minimum and maximum price range in which the re-pricing can happen. Having a minimum and maximum price range for a product ensures that the repricing happens only within the specified range without causing any profitability issues for the sellers.
Please note that a minimum price should always be equal to lower than the current price to avoid pricing errors.
For example, if a seller chooses to stay below the buy box, he can specify by entering the value (let’s say 10 cents) and the Minimum price is set at $22 and the Maximum at $29. The seller’s current offer is $27.50, and the buy box offer of a product is $25.00, this rule automatically reprices the seller’s price by the specified amount to $24.90 to stay below the buy box price by 10 cents and gives them a chance at winning the buy box. This repricing runs till $22 and post which the rule automatically stops due to the current price equalling the minimum price set for the item.
Additionally, Sellers have the option of choosing what type of offers they want their price to be compared to.
- Same condition as theirs (‘New’ or ‘Used’)
- They can choose to compare with offers from sellers with the same fulfilment method or offers from other 3p sellers
- They can choose if they want to compare their pricing to the price that is off amazon or not
- They can also choose to pause the repricing rule if they manually update their offer on seller central
Lastly, Amazon Automated pricing is quite effective as it saves a lot of time for the sellers. The fact that this isn’t subjected to any kind of human error makes it even more appealing.
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About the Author
Meet Arjun Narayan, a Business Dynamo with two decades of conquering boardrooms and founding two companies that didn't just survive but thrived. When he's not navigating business strategies and delivery teams, you'll find him immersed in his love for cars and exploring new models, geeking out over tech trends, globe-trotting for new adventures, and occasionally pondering the mysteries of the universe over a good cup of coffee.
