The Factors Affecting Product Pricing

In the Amazon platform store, the factors affecting product pricing mainly include platform commission, product quality and procurement costs, market supply and demand, expected profit, brand image positioning, promotion strategy, capital turnover, marketing promotion costs, competitors' prices, transportation costs and other factors.

1. Platform commission

Sellers sell products on the Amazon platform, and the platform will charge different percentages of commissions according to different categories. The commission of media products is generally 8% to 15% of the price of the product, and the commission of non-media products is generally the total amount of the order (including the price of the product, freight, gift packaging fees of 8% to 15%, and some categories have minimum sales commission restrictions.

2.Product quality and procurement cost

The production cost of the product includes raw materials, research and development and manufacturing expenses, transportation costs, and the profit earned by the factory itself. If the seller makes improvements or micro-innovations to the product in order to guarantee the quality of the product, the cost will also increase. However, not all sellers on the Amazon platform have a factory, and sellers without factories need to carry out product development and procurement in the market, and the level of procurement costs has a direct impact on pricing. If the procurement cost of the product is high, the seller will naturally raise the price in order to ensure profits.

3.Market supply and demand

Market demand has a significant effect on the pricing of products. When a product on the market is in short supply, its price will rise accordingly. Conversely, when the product is widely distributed online and offline by merchants, the buyers' choices will be diversified, and the seller's profit will be diluted and its price will also fall. In addition, the speed of research and development of new products in each industry is very fast, and when new products appear, the attractiveness of the original products to buyers will also decline, and the price reduction is inevitable.

4.Expected profit

Profit is also an important factor affecting price. As a seller, need to invest a lot of manpower and material resources, the selection of products will consider whether the product has a market and profit, otherwise there is no need to develop and promote. And the seller's expected profit for different products in the store is also different some may be several times the cost, some may be only a few percent.

5.Brand image positioning

The product brand positioning of each store is different, and the price positioning is also different. Brands that take the low-end market line of products will have low prices; Take the brand of mid-market line, the price is moderate; Brands that take the high-end market line have high prices, and their products and services are high-end.

6.Promotion strategy

Each e-commerce platform will have different themes of promotional activities, such as Amazon platform in the middle of July to have a member day, the second half of the "Double Eleven" Christmas promotion. Whenever major holidays and promotional holidays come, platform stores will adjust prices on a large scale.

7.Capital turnover

Some enterprises in order to reduce risks, quickly run funds, will also adjust prices, if necessary, will also take small profits and high sales means to stimulate the market.

8.Marketing promotion expenses

There are many marketing promotion means on the Amazon platform, especially the products need to be promoted inside and outside the station, which will generate corresponding promotion costs.

9.Competitors' prices

The product homogenization of cross-border e-commerce platforms is very serious, such as Amazon platform has a policy of selling, a product is not only one seller, so there are many competitors. Competitors' prices will also become the reference basis for sellers to set prices and adjust prices.

10.Transportation costs

If the product is free shipping, shipping costs will account for a large proportion of the price. If the seller chooses FBA, it will also incur FBA header fees and expenses related to using the FBA warehouse, which will also be passed on to the product cost.

In addition to the above factors, there are other factors that also affect the price, such as the consumption habits of buyers, sellers to replace the product. In addition, some warehouse products will also be low price promotion.