021: Mastering the Art of Amazon Pricing: Unveiling Game-Changing Strategies

Speaker 1: 0:00

Welcome to the brand fortress HQ podcast and another tactics Tuesday episode. Today we're gonna be talking about probably the biggest lever on Amazon that a lot of brands are just kind of afraid to pull, and so we really wanted to cover it today, because there is a lot of progress to be made here and a lot of different Strategies and tactics that you can use. And so today we're really talking about how to optimize your price, how to test pricing and how to think about pricing on Amazon. So, with that said, I think the first thing that I want to start to cover is Price testing, just as a concept. You know, matt, I know that you have quite a bit of experience with this and definitely some thoughts about it how do you think about price when you're launching a new product and when to adjust that price?

Speaker 2: 0:47

So for the most part when I'm launching a new product, I mean the there's really only one thing that you have You're you're up against the sea of a whole bunch of other competitors selling the same product. So when you have no reviews, you don't have any social proof, like really the only thing. The reason that you can give people to buy your product, in my opinion, is a price that's somewhat competitive. I like to be at the higher end of the price point in pretty much every category that I sell in, but when I'm launching, I understand how important it is to be able to Be competitive in terms of pricing. So I, for the most part, I'll usually get my price to write or as close to break even as possible as makes sense, knowing that I'm going to be spending a lot on advertising during that time. But I like to start pricing in as close to break even as possible and then keep it there for the first week, week and a half, and then I start creeping my price up by a buck or two, depending on how far away I am from where I want my ideal pricing to be. If you go too fast, there's some sort of there's some Fear of losing the buy box and I've had that happen a couple of times by going up a little bit too fast, but in in general I like to be right around, break even and then Raise it by about a buck every week after about two weeks of being at that price point for the most part.

Speaker 1: 2:10

Okay, so I want to drill down on a couple of things there. So you know, just to use numbers as an example, let's say that your category is, you know, at um Kind of averages $30 and you maybe want to sell at, you know, 40 or even $50. When you're talking about starting out and that price points, are you setting the, the product price to that level, or are you actually setting the product price where you want to be and then setting, like a sale price or a prime deal price down to, you know, essentially your break even?

Speaker 2: 2:45

So I test it. Obviously everything, everything for me, is a test, but what I have found in most cases works Is having the price set at where I want it to be and then a sales price. But then in a lot of cases what I'll do is I'll bring the sales price down to about half Of where I want it to be maybe a little bit more than half of where I want it to be and then do a pretty big coupon too. I really like doing a coupon in the beginning and a big coupon, as big of a coupon as makes sense in the beginning, because that shows up in the search results. The strike through pricing I know that we're going to talk about that. We talked a little bit about before we hit the record button. But you don't get that strike through button right away in the beginning. So you have to like for me in the search results having that coupon stand out, and I like I've always done a dollar, and when you a dollar amount as opposed to a percentage, and when you get into that five or six dollar coupon range, it just looks big. In my opinion. I've found that that kind of converts a little bit better in terms in the beginning, having a pretty decent size coupon but also having that sales price, probably about half of where I want the the price ending up landing in the end.

Speaker 3: 3:52

So a couple of points on that I would say. One is In terms of the strike through pricing, because the only way that you can actually get strike through pricing Is if you actually get a sale at the higher price. So just to clarify what strike through pricing is, most people would know, but it Essentially when you, when you see your listing, both in search and on the actual listing itself, if you have the strike through, essentially what that means is Amazon's going to show the price that somebody's actually going to pay, but then they're also going to show a price next to it that is has a has a strike through mark through it. That basically is saying this is what this price actually. You know what this product actually costs, or what we, what we're saying it actually costs, but this is how much you're going to pay. So you're going to save, you know x percentage off and you want that strike through because when people see it, of course they feel like they're getting a deal. But the problem is you can't get that strike through unless you've actually had sales at that higher price point. So essentially what you end up doing to get strike through is you have to set a high price. You get sales at that price. You set your your list price on your product at that that higher price point and then you can price the product less if you want down the road and you get that strike through. So technically you would actually be in To some degree better position If you actually had your strike through price be higher Then the price you actually want to sell at, because then your normal price Can actually have strike through. Like, for instance, right now on our pool pool. We have strike through pricing on that and we've actually had it for months, um, and it hasn't gone away. We have our, our retail price, our list price on that product. That set it like 220 dollars and we're selling it at 175, which is our standard retail price. But we got some sales at that 200 dollar price point, 220 dollar price point, and so now we have that strike through. Now it's a little bit of a crapshoot how long you keep that strike through and whether amazon even gives it to you or not, but you it's a guarantee you won't get it unless you actually have sales at that price. So for me I would say when you launch out of the gate, what I would do, as fat it is if you have an audience, even a small audience, if you have an audience on a email list or an sms list or whatever, I would list your product at above, like you want. You want to list the product at whatever price you would like the strike through to be, and I would. I would say you want it to be like 20 higher than the retail that you'd like to sell at. Put it at that price, send your list over there, and now you can't at. You don't want to ask for reviews on this right, but get the sales. So send them over and say, hey, we'll give you a rebate Of whatever you know like. Maybe it's a 40 percent rebate, but they're only buying it for 20 percent over the retail right. You tell them we're going to give you a 40 percent rebate. Go buy it, give us your order ID and we'll rebate you the money. You only need a few sales. You don't need very many. As soon as you get those sales, now you can get the strike through. So now you can put the price down to the retail price that you want it to be and you can offer a discount and a coupon, if you like, for your launch, because it's only going to take you a day to get those sales. Like, just push through a few people off of your audience list, get the sales. So you haven't really ruined your honeymoon. You've only taken maybe a day or something, right? Then you drop the price to retail, you set your sale price, you put on your coupon and then you just start rolling.

Speaker 1: 7:34

So let's walk folks through this a little bit, because I think it can get really confusing, because there's kind of three prices in Amazon. There's the list price, which is kind of you know, if you go, you know it's kind of an overall store price, what's that? It's like suggested retail. Yeah, your suggested retail price, and then there's the you know, quote, unquote your price, which is on Amazon, kind of the you know the Amazon general price, and then you can also run a sale through your listing, which is considered the sale price. Now what we're saying with the strategy and let's just put some numbers behind it to make it a little bit easier, I think, for folks to understand, and kind of what you put forward there, Mike, because I think it is a really good strategy. So let's say we're launching a product and, just to make the math easy, let's say that our list price is $120, our your price is $110. And then would we, so we would need to sell at least one product at that $110 price and then set up a, you know, let's say we set our sale price at $100 in order to get that strike through pricing. Is that accurate?

Speaker 3: 8:49

So essentially what I would do. Let's keep so if we're keeping with trying to do easy numbers. Let's say I want to sell my product at $100, like that's what I want, the retail, the actual your price, like what people are actually gonna pay if I don't give them a discount. I wanna sell at $100. Then you would basically be setting your list price and actually the starting price that you're actually selling at. So, like when you create the listing on Amazon, you would say, okay, I wanna sell at $100, I would probably set it at like 130 bucks and I would set my list price and my offer price to 130 bucks to start. Okay, and then I would then send a message to a very small portion of my list, right, I only need and I would try not to do like one sale. I would maybe try to get like three or four sales, just to make sure you got a little bit of data there, right? But I would send to enough people that I can get those four sales and they're gonna confirm it with you because they want their rebate, right, so you're gonna know whether you got the sales or not. You're gonna get the Amazon ID, so you send them in. You only send a small portion of your list, get those sales at 130 bucks. As soon as you've got those sales, now you go back in, you edit the listing and you leave the list price at 130, but now you put the offer price at 100. Then you go in if you want and create a sale price for, say, 80 bucks or whatever, and then you can set a coupon for five bucks or something right. So now your retail's 100, you've already gotten some sales at 130, your sale price is, say, you know, $90, and with the coupon it's 85, and that's your launch. Like you run that you're running and you could have it be whatever you want. If you wanna give more, like Matt was saying, give a really significant discount, you can. I would argue that if you have a large enough audience you know that you can market to, you don't have to offer a significant discount at launch Because you can basically just send your list to the listing, tell them hey, the retail price is 100 bucks right now. If you get into Amazon, you know you can get it for $85, you know, and here's an extra, you know, maybe you give them some, you know, but you don't have to give a massive discount If you already have a list of people who actually want your products and love your brand, a 15% discount. We found that to be sufficient, you know, for a launch, to get ranking for what we want, and so if you get those few sales at a above list, then you drop it to list, you set your sale price, put a coupon on it man, you're golden, and then you get your strike through.

Speaker 1: 11:29

Okay, what are your guys' take then on, because I know one of the strategies out there is to kind of, you know, swap every 30 days between a coupon and then lowering your price in order to gain strike through pricing.

Speaker 3: 11:44

I don't know if you've got anything to say on that, matt. To be honest, we haven't really been playing around with strike through pricing much until just recently. So this is what has worked for us and it's been pretty effective for us to maintain. So we haven't really had to do much else to maintain it like we. Pretty much it's just been there. I will say this much, and this is another value point for having strike through pricing is that whatever that strike through prices, if you want to run a lightning deal, you only have to give. Like, the discount that you offer Only has to be a certain percentage off of whatever that strike through price is. So essentially, right now our strike through is a 220 bucks for our poll and we're selling at 174. A very slight discount off of that 174 Gets us low enough that we can run a lightning deal, so we don't actually have to offer a very significant discount at all to get that lightning deal offer option, because we have strike through. But you don't have strike through, then it has to be a discount off of your other price and so then you have to really discount it more heavily.

Speaker 2: 12:52

But hmm, pretty well interesting. I did not know that. I learned that. So what you're saying?

Speaker 1: 12:57

just to kind of pull that apart is so you guys have strike through your original prices like $220 are straight. And then your your price. Your actual sale price right now is 175. Our offer price like there's no sale on it right now, our offer price is 175.

Speaker 3: 13:17

But Amazon, you know, like when you go into your lightning deals and it tells you what products you could run and you know Whatever, and it tells you what price you've got to sell it at, we can basically do like I don't know, it's like 170 bucks and we get lightning deal. You know status.

Speaker 1: 13:31

Hmm, now have you run a lightning deal on that to see how it does.

Speaker 3: 13:35

Yeah, it does pretty well. I mean it still. It still runs through because essentially again, you know You're getting a lot of new to brand people who don't really know what price your product actually normally is and so it's actually telling them what. So when you run the lightning deal, it's telling them what the discount is off of the List price. It doesn't tell them what the what the discount is off of your normal price. It tells them what the discount is off of list price. So they don't even see that we've been selling it at 175. They only see that it's normally 220, you know list price is 220, you're paying 170.

Speaker 1: 14:09

Interesting, and then that applies to prime deal as well. I don't, okay, I don't know. And then, for folks that are listening, so prime do I'm a little bit more familiar with and I think it kind of depends on this the season. As to you what the max discount is, I think it's normally 10% and then during like Q4, I think it's, the requirement is like 20% off the your price. So what the price that you've actually sold a product is the requirement there for prime deals. Now, the nice thing about prime deals and kind of the same thing there, where you actually have to sell a product before you can run these. So just you know, be aware of that, like it's it's greatest part of a launch. But until you, you know you can't have it as your only launch strategy, because if you don't sell any units, you can't. It won't allow you to use this. You actually have to sell some units before you can use prime deals. But the nice thing about prime deals is is that you get a badge from it and I'm pretty sure that you get Significantly more visibility, because Amazon obviously wants to push these sorts of of deals to entice customers in order to purchase, and so you see a pretty good uptick in Sales and traffic, or at least traffic from this. So, and when you're launching a product, one of them you probably one of your biggest battles is visibility, so it does really help with that piece of it. Now for prime deals, you don't actually they're free to run, at least as of right now, when you're launching a product, you're not paying anything extra Outside your discount in order to run that prime deal and you get a lot more visibility. So how does that compare with a lightning deal? Because I think you do have to pay for in order to run a lightning deal. Yeah, you do. There's a cost to running a lightning deal beyond the discount. I honestly can't remember what that cost is, to be honest.

Speaker 3: 15:58

Because I don't actually run the lightning deals. I've got somebody on our team that runs them, so I'm not sure what that cost is. It's not that terribly high, you know, and especially if you're not running a massive discount, you know, to get the lightning deal, then it's kind of irrelevant, you know. So for us it works out pretty well. If you're having to offer a pretty significant discount to get that lightning deal, then that can be problematic. I would also say bear in mind, like I've said, that we've been able to maintain that strike through. I'm actually a little bit surprised that we've been able to maintain it, but I think that's a good thing to do is to get that lightning deal done. But if you lose it again, you just have to get sales at that price, right? So in Amazon can be a little bit finicky. I don't want to tell you that it's a guarantee that you get the strike through, because we have had times when we did get sales at the you know the higher price and we didn't get strike through. So you don't always know for sure, but I can tell you with absolute certainty you won't get strike through unless you've had some sales at that price. The question then is how long do you maintain it? But the point is, even if you lose it, if you just then put the price back up to the list price, you will get a few sales. Like I mean, if you've already got volume running through your, your, your listing right, raise the price back up, you will get a few sales. It's only gonna take you a day if you've got any sort of decent traffic running through. You're not gonna lose that much positioning or things like that. You know, raising your price for a day, but you get those sales, then put the price back down and just wait for strike through to happen again, and then again, now that you've had those sales, now that you you have the strike through, then you can run through that same process All over again with the lightning deals and coupons and anything that you want.

Speaker 1: 17:37

So when you're resetting that, just out of curiosity, you're not running a sale price on your listing, you're just running the your, the what Amazon calls the your price correct.

Speaker 3: 17:48

Right, when we're trying to reset that and regain the strike through, we just simply raise your price, the offer price, back up to the list price. So in other words, in this example, we, instead of selling at 175, we pop it back up to 220. So now the list price and the offer price are the same, at 220. We let the, we let the, you know, we let it run. We don't have a sale or anything because we got to sell it at 220. We leave that on. We make a few sales that day, you know, and then we turn it off, we put it back to 175 and then if we want to run a sale or a lightning deal or something, then we can.

Speaker 1: 18:24

Okay, so you don't normally have a sale price on that product, is that, no, normally?

Speaker 3: 18:29

We don't actually run a sale. You know all that frequently we try not to like. We, you know we need the margin. You know, like I mean, it's important that we maintain our margins so we don't really run sales a lot but when we do like we can basically run it as a lightning deal because we don't have to. You know we don't really have to reduce the price that much, you know, in order to get that. You know that significant strike through. You know, discount Okay.

Speaker 1: 18:55

And then do you guys, either of you have no or have any hunches as to how coupons affect that. So again, let's go back to our example and say you know you sold. Say you sell a product at that, you know your $220 product and rather than you know, having dropping that price down to $175, if you offer, say you offered, can do a little bit of public math here. You know a $35 off coupon, sold units at that and then dropped it down to 175, would you get that strike through pricing? I don't think so. Okay, so the coupon does take into a, does impact, whether you get strike through pricing or not.

Speaker 3: 19:37

I don't know that you would. I would say this one of the things that we have done in the past and we do run through on occasion probably should do a more actually, but because we don't really like to discount too much on a regular basis, we don't but is that you can get an entire stack. You know. So, essentially, you know, using the method that I just said, you know you can get that strike through. Then you could run. You know a discount, you know, like a sale price, right. So you've got the strike through, you've got a sale price. You could add a small coupon and then you can also do an additional promotion. You know, like maybe it's a buy two products, you know get a certain percentage, right. It may be that a lot of people don't take advantage of that, but it gives you this massive stack. Where number one, you kind of take up space, but also all of these discounts are showing up there, right, like. So it increases your click through rate and your conversion rate just because you've got this stack of discounts. You know I've got strike through, I've got a sale, I've got, you know, a coupon and I've got this additional promotion down there, so you can have that whole stack all at once.

Speaker 1: 20:48

Yeah, and when you say that I mean with that stack, does that stack show in the search results and on the listing All of?

Speaker 3: 20:53

I don't believe that all of it shows in the search results, but a significant portion of it does. Essentially, I believe it would be your strike through, your sale price and your coupon would show up in the search results. I don't think that the extra promotion that you run would show up there. That would be just on your main page, but the other three will show up in search results. Okay, yeah, and I think that's mostly what I'm talking about.

Speaker 1: 21:21

Okay, yeah, and I think that's mostly what I've observed as well is that you know those three will show up, but any sort of like I shouldn't use the word coupon any other promotion that you run on it, like a buy to get 10% off or something like that. It'll show up on the listing, but it doesn't show up in the search results, correct, yep? Something else that I just want to touch on real quick that's related to this, as we're talking about, you know, different ways to kind of adjust your pricing is with coupons. For people that are listening out there that may not be aware of this is that when you run a coupon on Amazon, usually only about 30 to 40% of those coupons ever get redeemed. Yeah, so what that allows you to do is, you know, say that you would normally offer, you know, $3 off. Well, now you can essentially offer a $9 off coupon because only a third of those people are actually gonna redeem it. It's the same you know cost to you if you will, when you'll get it from a margin perspective. But kind of going back to what you were saying, matt, which is, when it comes to coupons, first of all having a dollar or you know a dollar amount as opposed to a percentage. We've seen the same thing where we see better clip-through rate, better conversion rate on actually having a dollar off, and I think that a lot of that's because otherwise the math gets complicated, because if I put 25% off on there and I've got a $35 product, I mean I have to pause and do some math in my head in order to figure it out. And I can guarantee you, as customers consider, you know the 30 to 40 products are on the page plus the ads. They're not gonna do the math, whereas you know just as $5 off. Well now it's really easy to figure out $35 product, $5 off is $30.

Speaker 3: 23:01

And honestly I would say it's unfortunate, but there are a large percentage of individuals that are looking through those search results that it would not matter how much time you gave them, they would not be able to calculate what that percentage discount actually means to them. So you know, I mean it's a sad state. You know I mean I hate to say that that's true, but it is true, and so I would never, ever, ever, ever use a percentage discount.

Speaker 1: 23:26

Yeah, yeah. So I think those two things I just wanna make sure that listeners are aware of, because I think it's so powerful. When you're thinking about it you're like, hey, I don't have a lot of room in my margins but I wanna see what I can do in order to increase my click-through rate and my conversion rate. Yeah, so if you're offering a coupon for a couple of dollars off, it really is costing you very little on your margins, and if you can see your click-through rates and conversion rates go up from that, it can be a way to actually profitably boost your sales on Amazon. And it seems kind of counterintuitive because, yes, you're offering a coupon, but it's because of how many are actually redeemed and the additional visibility that it gets you and kind of catches people's eye, that you can actually come out ahead on coupons if you use them strategically because of how many get redeemed and kind of how they work.

Speaker 2: 24:18

And also, just like with advertising, I mean you have to take more of a long kind of a long game approach, or at least viewing it as the long game. When you're advertising, your goal is increasing your organic rank, and it's the same thing with a coupon or sales prices you're gonna increase your sales velocity, you're gonna increase your conversion rate, which those are gonna prop up your organic rank. So if you do it for a short amount of time or think in your head this is for a week or two to increase my organic rank, the result of that is it gonna be free sales, which that's gonna bring you down to your tacos overall anyway. So like that's every coupon or every sale price that I run, the goal is to increase sales velocity so that I increase my organic rank. So it's not a forever thing. I wanna increase my organic rank, so this is the step that I'm gonna take to get there. So always the longer approach. When you're looking at it, it's up like that.

Speaker 3: 25:13

And I would also say, just to add to that, is that, as much truth as there is in that statement, don't ignore the fact that it's a test, right? Everything's a test, cause every product is gonna be different in terms of what the actual response is, the algorithmic response. Let's say, to anything that you do, whether it's a sale, whether it's a coupon, whether it's a change in your listing, whatever it is, every product and every category is different in terms of just what that response is gonna be and how your search rank's gonna change. So I think we have to be careful not to make a blanket assessment that says or implies If you run a coupon because it's likely to increase your CTR and CVR, it is going to increase your search rank right, it likely will. It depends on you know the listings that are ahead of you and how much stronger those listings are in other categories right, because there's more to the algorithm than just price and sales velocity. So you know if the products that are ahead of you have way more sales velocity than you have, for whatever reason you know, then even if you get more sales velocity from that coupon, don't assume that it's going to give you better ranking. You have to test that. So if you're going to run a coupon, make sure you know what your current ranking is. You know, and then run the coupon and see if it actually changes your ranking. Know what your sales velocity is, you know, and see how much does the sales velocity actually change with the coupon and do you maintain that velocity after the coupon? Like, how much of that do you maintain Are you? Is your velocity higher? You know, going forward after the coupon ends than it was before the coupon? Because if it's not, then what you established is one of two things Either, for some reason, a coupon in your category isn't going to accomplish that, or two, you need a bigger coupon. Right, you know? I mean that's what you've established, but you haven't established anything if you don't know that data before you actually run the coupon. I also wanted to touch back on one other thing that we were discussing earlier before we move on.

Speaker 1: 27:29

Actually, mike, before I'm going to sidetrack you just a little bit before we go on, because I do want to address one thing, which is, if you're measuring that, what I would encourage people to do is, rather than and what we do is rather than measuring based on sales velocity, is we actually measure BSR? Yeah, and that's an important point because sales velocity you know you might run a coupon and your sales velocity might go from 100 units a day to 200 units a day and you're like, wow, this coupon is the best thing ever, right? And it just happens that you were in a lucky week where you know people were interested in buying your product that week along with everybody else in that category and kind of, you know, everything went up all at the same time and you just happen to have, you know, really good luck. Or the reverse could happen to where you're like, oh my gosh, this you know I'm really made 50 sales this week. This coupon is terrible. But when you look at the BSR rank, it's really going to tell you that story of how did you do in comparison to your category, right? So that way you could know how effective this coupon or any other sort of price testing is if you're looking at the BSR, because now you're comparing apples to apples instead of just your sales velocity.

Speaker 3: 28:36

It's a good point because it at least eliminates one variable, right, it eliminates that variable that says, okay, did the market for this, you know particular product niche increase or decrease as a whole during that week, you know, or whatever that affected things. So you know it. It still doesn't fully answer the question because technically there are other variables that come into play. Maybe Amazon highlighted you someplace where you weren't highlighted before. Maybe you got a badge that you didn't have before and you didn't notice it. I mean, there's all sorts of other variables that could come into play that could change that. So I would argue whatever result you see with that coupon, I would run it again the next month and see if the results are the same as they were the previous month, because then you probably eliminate whatever other confounding variables there might have been in that. But going back to what I was going to say in terms of product launch and pricing, one of the reasons that I suggest that you run a launch in the way that I was describing, with getting that list price sale you know that higher $220 price sales then putting your offer price, your normal, you know price that you want, and running sales and discounts off of that is because of exactly what Matt said earlier, which is Amazon is very price sensitive. They don't like it when you raise your prices and it's not uncommon for them to put the kibosh on you and actually you know you lose the buy box on your own product. You know, like it's your product, there's nobody else selling on your listing and you lose the buy box. Like I mean it's insane, but they do it right, like if you raise your price too quickly you lose the buy box. That will never, ever happen to you. If you have strike through pricing at that list price, that won't happen. They will not do. You can raise the price as far as you want, at least up into that list price as fast as you want. They will never bother you at all. Now, technically you don't have to worry about it Because, generally speaking, you don't want to sell at that price anyways. You want to sell at 175. But the point is you don't have to worry about okay, I started my price on my launch at 50 bucks, even though I actually want to sell at 75. But I haven't got any sales at 75 yet. So now I got it inch my way up to that $75 price tag after the launch. So all that time you know, between now, between my launch and when I finally get to the price I actually want to sell at, I'm technically losing money. You know that I could be making more because I could have that higher price point. If you start your launch with that high list price, then you don't have to worry about that. You can raise the price faster.

Speaker 1: 31:15

I honestly did not know that. So that's that's really good to know, because I have seen it. It doesn't happen very often, but I have seen it where even things. I've seen it with more with FBM than with FBA. But I have seen FBA products lose the buy box for various reasons, one of them being price. You know, especially for FBM products, if you're not fulfilling on time or there's other issues, it's you can lose the buy box. It is a huge pain.

Speaker 3: 31:42

It is. I can tell you that I mean we're running into an issue right now, in fact and this is another and I mean on the pricing topic, like I mean this is, if you're selling off Amazon anywhere, you had better make sure that you have control over those prices, always on those other platforms. I'll give you a perfect example of where the problem can come in, because we're dealing with it right now. So we took a foray into selling on target, but we couldn't get on there on our own because, basically, to get target plus, which is the program that they have for third party sellers At least at the time anyways, it was invite only and we hadn't gotten an invite. So we went through project retail and they were great. They have an arrangement so they can actually bring in a brand and they have target plus access, so essentially, they will sell your brand for you on the platform, which they did. For various reasons, it didn't work out for us. We weren't really getting the sales that we needed and there was some expenses that were into it because of low volume and whatnot. So we decided to end the program because we were paying a management fee to project retail and it wasn't worth the management fee right, so we terminated it. So the problem is, we decided to raise our prices on Amazon for a number of those products. Well, target has not removed those products from their catalog and they still have the price that we were previously selling at, and project retail now doesn't have access to change those prices because they've removed that those products from their third party catalog. So now we have no way to change the prices on those products. So if we want to raise the price on Amazon, they're now we're losing the buy box on Amazon because Target has a better price, even though the product isn't actually available on Target. Nobody can buy it and we can't change it. So if you are selling on any other platform outside of Amazon, don't ever lose the right to change the prices on those products or make sure that they have been entirely removed from that catalog before you exit from the catalog, because otherwise you're going to be screwed.

Speaker 1: 33:57

Yeah, and I think that that ties in really well with discussion that we had a couple of weeks ago about getting into retail and making sure that you have map pricing, which is I'm trying to remember exactly what it stands for, but it was like minimum acceptable pricing or something Minimum advertised price. Yeah, so basically, what it is is built in the contract and it says if you sell the product to any major retailer, this is the minimum that they can sell it for. And you do want to really pay attention to that, for exactly the reason that you pointed out there, mike, is that if that retailer then puts that online you know your product that normally sells for 175 and they put it online for $150, it's possible that you could lose your Amazon buy box because of that.

Speaker 3: 34:43

And realistically I mean probably everybody listening to this knows this. But in case you don't like I mean if you've never experienced it before even if there's nobody else on your listing and even though, technically, if you don't have the buy box, people can still buy the product, you will lose massive sales volume if you don't have the buy box even though they can still buy it, because most people don't understand. They don't understand how to actually order the product if the buy button isn't there.

Speaker 1: 35:11

You can't use sponsored product ads if you don't have the buy box. Yeah, it takes. I mean, unless you really know what you're doing, you're not gonna buy that product. That's just what boils down to you Right.

Speaker 3: 35:23

And most people on Amazon, don't they just click buy. Like they don't know Correct.

Speaker 1: 35:29

And. Amazon will show them.

Speaker 2: 35:30

You know essentially your competitor right next to it, they say hey this guy's got the buy box, buy this product instead.

Speaker 1: 35:37

So I mean, it really is a double whammy.

Speaker 3: 35:39

It's a nightmare scenario, honestly.

Speaker 2: 35:42

So how are you gonna fix that, mike? How? What is your? What is your way to fix the target issue then?

Speaker 3: 35:48

To be honest, I don't have a solution. What I'm gonna do. I had a guy, so the reason, so the agency that's helping us get into retail like actually brick and mortar retail. He had a contact at Target so we thought we might be able to get some juice that way, but so far that's proving not to be a solution. So I'm gonna go back to project retail, even if I have to pay them to bring us back on as a client, briefly, so that they put that back into their catalog and change the price, and then we terminate it, like I mean it's the only solution that I can think of is to sign back up for their program and have them add it back to their catalog so they can change the price. I don't know any other solution.

Speaker 2: 36:29

Yeah, that stinks.

Speaker 1: 36:32

All right. Well, I think we've had a great discussion about pricing. There's obviously a lot more to talk about. You know, one thing that I kind of wanna listeners to we'll say for another round, but listeners to be aware of is that you know we talked a lot about different. You know discounting methods and that type of stuff, but part of optimizing your price is also raising your price, and so I've definitely seen situations where you can raise your price and you can actually see your BSR and your sales volume go up. So, depending on how many reviews you have, what your competition looks like, what time of year it is, there is definitely a movement in both directions and you don't really know until you test. So I would say that would be my biggest takeaway for listeners here is that you need to test price on your products in both directions in order to really know what your product should be priced at, to get the best moment, the best of both worlds when it comes to both velocity and profit on Amazon. So that'd be my tip for listeners, mike and Matt, any tips that you wanna share with listeners as we wrap up this episode.

Speaker 2: 37:42

You actually took mine because I mean, for me, what I would rather do is I would rather increase the value so that I can increase my price, as opposed to dropping it. I mean, you see, in a lot of categories these Chinese manufacturers are playing the opposite game and racing to the bottom, like what you know. The things that we talk about are really increasing the value, or even if it's just perceived value, of your products so that you can increase the price. I'd much rather play that game than play the opposite.

Speaker 3: 38:10

Yeah for sure, because you're not gonna beat them at that game, right? You're never gonna beat a Chinese seller at that game because their margins are so razor thin and they're totally okay with that, like they've got systems built so that that's fine, like they don't have a problem with that. You're never gonna be able to beat them at that game. So why on earth would you try? Play a different game? Play the game that they're not going to play. The vast majority of Chinese sellers are never gonna play that game of premium pricing. They're always gonna play the discounting game. So play a different game. I would also say, before we wrap up, just real quick, on the topic of raising prices, their, there's something to be said for this kind of minute price increase testing. You know, like a dollar or two or something like that. There's also something to be said for testing of a significant price increase. You know where maybe it's a 50% increase or 100% increase, because there's a psychological change that happens, you know, like within a category. If you've got a category where everybody is selling at $15 to $20 and there's a product that's selling at, you know, $30, you know, or $40, there is something about it that makes a person think what's different. You know like there must be some reason that this product is selling at $40, there must be some reason. It's more premium, right, and to a buyer who values a premium priced product, like they already have a mindset that says I always buy the most expensive product because, generally speaking, I get better service, I get a better product, I get a better warranty, I get whatever. Sometimes I get screwed, but more times than not I benefit from buying the most expensive product. There is a customer out there that has that mindset and I will tell you, if you sell to that customer then it means every product that you that you sell, you can sell at that premium price point as long as you're giving them good service and a good product. So from Matt's, you know what Matt was saying offer something that actually gives them more value, like perceived value is important, but make sure that when they receive the product they feel like they're actually getting the value that they perceived on the front end right, otherwise you're screwed. But if you can increase that perceived value significantly in some way, I would argue you might want to test a 50% or 100% price increase and see if you can sell to that different customer mindset, you know, and have a significantly better margin. Now volume may change significantly so you got to weigh those numbers. You know volume matters, but you know. But pay attention to that option. You know there may be a reason to test not just a dollar increase but maybe a $10 increase.

Speaker 1: 40:54

Yeah, and that's. I think that's a fantastic point to make, because we have a client right now that you know they charge 10 times what their highest price competitor does. Wow, and I mean they have a very good product. Don't get me wrong, it is very, very good, but it is towards a very niche. You know specific audience. It is not for, you know, every consumer, but they charge $10,000. But they charge 10x and it's a totally different business model. Yeah, I mean they can.

Speaker 3: 41:27

They can, I mean most of our products are 5x, you know. I mean we're not at 10x, you know, but even 5x, I mean that's pretty significant, you know, for 5x and it is a very different. It's a very different model, you know, of selling, but it's not. It's an effective one, you know, depending on you know if you do it right.

Speaker 1: 41:44

Yeah, 100%, and I would say that they bring that value to that niche that they talk to. So that's the other piece of it is. Is that's. You know, they didn't just 10x their product as just because they could. Well, they did it partially because they could and then partially because they do actually have a really good product, because they really understand their market.

Speaker 3: 42:01

Well, and you can argue that right, like I mean the the it's, like it's. Like I mentioned the other day. You know, hermosi came up on my feed, you know, and he had that video that was basically saying you know, like niche down to the exact right customer who will be willing to pay 10x the price Because that customer, for that customer, the product that you are selling and whatever services you're bundling with it and whatever add-ons you're putting in there, you can argue ROI to that customer and they understand it as an investment. So, like, you know, if you're selling at 10x, if that specific customer needs the exact feature set that you're offering and to them it actually has 10x the value, like it's realistic, you know, because of whatever they're doing, then that price makes sense and everybody who fits that mold it will make sense to. And it's easier to argue that to them. Like they look at it as an investment, like, no, all day long I'm going to pay that price.

Speaker 1: 42:59

So Fantastic points and a great discussion today. I already know that we're going to have some more episodes talking about. You know, matt, I really want to dig into exactly what you're talking about as far as how do we add more value, because I think you're 100% right. That's something that you know a lot of the overseas sellers aren't doing, and it's a way that you can really differentiate yourself well. At the same time, time, you know, maintaining or even growing your profit margins, which is something that is becoming even more important as Amazon as a platform matures, and you look at fortifying your brands and then digging into the other components of pricing. You know there's a lot that we didn't touch on today. So I know that we're going to have some follow-up episodes on this, but we're going to stop here for today, and I think it just gives our listeners. You know, what I would encourage them to do is start price testing, whether that's, you know, through some of the other, you know, discounts or coupons or some of the other things that we talked about, or raising your prices. You know, start testing out there, because I think you're going to be surprised by the results you get from it. So thank you everybody for listening and we look forward to seeing you in the next episode.