While we have stated that sales velocity is the most important metric to determine your Amazon rank, it’s not the only factor. The A9 algorithm takes many factors into account, and we want to focus on another important one: price.
It’s obvious that price influences a buyer’s decision, but does it really influence Amazon’s A9?
Of course! Price is extremely important when it comes to ranking organically on Amazon and winning the Buy Box. Here’s how!
Price & Organic Amazon Rank
Price is both a direct and indirect factor that influences the A9 algorithm. First, we are going to take a look at how price is a direct factor for your Amazon rank.
Price as a Direct Factor
Pricing is the only factor that you have direct control over. You set the price. You can change it whenever you want. Other ranking factors, like sales velocity or relevancy, are out of your control. They are controlled by Amazon or by the buyers themselves.
When considering where you should rank, the A9 algorithm looks at your price and compares it to your competitors. Amazon wants to show the most relevant and best-priced products for each search query. Therefore, if you have a relevant product but your price is much higher than your competitor, your competitor will rank higher. However, a slightly lower price point can give you the competitive advantage you need to move up in the rankings.
Price as an Indirect Factor
Now that we have discussed price as a direct factor, let’s see how it can also be an indirect factor.
As we have talked about before, sales velocity (or the rate at which you are selling) is the most important ranking factor. However, sales velocity is influenced by different components of an Amazon listing, including pricing.
If your price is higher than your competition, you might not have good sales velocity. However, if your price is slightly lower, you may be able to increase sales velocity and get a boost in sales.
Therefore, lower prices = higher sales and increased sales velocity.
Price & The Buy Box
The A9 algorithm also determines who wins the Buy Box. Simply put, the Buy Box is the box on the right side of a product page where customers can choose to add additional items to their cart.
82% of sales go through the Buy Box on a desktop, and the number only increases for mobile devices.
To win the Buy Box, or to show up in the Buy Box, Amazon’s A9 algorithm compares competitors head-to-head to see who should win. And one of the biggest factors in this comparison is price.
Amazon looks at your price and analyzes prices for similar products on the market to identify and show the product with the optimal price. However, Amazon doesn’t take your selling price at face value. It actually considers your landed price.
Landed price is the total price of your product, including shipping. Therefore, if you can lower your landed price, you have a better chance of getting a share of the Buy Box.
But just lowering your price isn’t always going to get you the Buy Box. The algorithm also considers the following:
- Professional seller account
- Eligibility for the Buy Box
- New item (no used items are allowed to compete for the Buy Box)
- Fulfillment By Amazon (FBA) or Seller-Fulfilled Prime for Fulfillment By Merchant (FBM)
- Shipping time
So, if you check all the boxes and have high-performance metrics, you may be able to land the Buy Box without having the lowest price.
Determining Your Price
Now that we understand how important it is, we want to discuss some ways that you can determine the best price for your product.
- Manual pricing: Manual pricing is exactly what it sounds like. Sellers manually update their prices. However, it’s not feasible for sellers with a large number of products on Amazon.
- Rule-based pricing: Rule-based pricing relies on a system of rules that you set to determine your price. These rules examine the competition’s price and reprices your ASINs accordingly. This system has limited capabilities because it only takes into account competitor prices. Additionally, setting up initial rule can be time-consuming.
- Algorithmic pricing: Algorithmic pricing is the most sophisticated option and is great for sellers with many products on Amazon. This repricing strategy takes into account ALL of the factors that could affect the Buy Box, not just price. Because it looks at all factors and adjusts your pricing accordingly, it is shown to yield the best results out of all the repricing options. However, this method is very expensive and should only be used by sellers who are already experienced and are driving high profits.
Try the repricing strategy that makes the most sense for your Amazon business. Because each seller is different and the markets are always changing on Amazon, pricing will need to be adjusted regardless.
If you want to know more about how pricing can affect your organic Amazon rank or your chance of winning the Buy Box, feel free to contact our Amazon experts!