How Amazon Competitive Pricing Works

Consumers care about low prices, which means Amazon does too. Part of its quest to provide customers with the best possible experience involves aiming to consistently be the most affordable place to buy a product.

So far, it’s working. A third-party analysis from Profitero confirms that Amazon has the lowest prices among all US retailers, coming in an average of 16% below competitors.

That’s great for customers but creates some challenges for vendors on the platform. If you want to make sales on Amazon, you have to understand how Amazon competitive pricing works and strive to keep your prices lower than your competitors—both on the platform and off.

What is Amazon’s Competitive Pricing Policy?

For products sold by multiple merchants on Amazon, winning the Buy Box is a key factor in how many sales you’ll make. Pricing is just one factor Amazon takes into account when deciding which seller should get the Buy Box, but it’s an important one. If your prices are higher than other sellers on the platform, you won’t be featured as often and will likely lose sales to others who charge less.

But Amazon’s competitive pricing policy doesn’t stop there. The company also pays attention to how products are priced on other websites and marketplaces across the web. Amazon establishes a competitive price threshold (CPT) based on prices from other retailers. Your price could be the lowest on Amazon, but if it’s higher than a customer could find from another retailer (factoring in both the product price and shipping cost), Amazon may suppress the Buy Box. In other words, it could remove the “Buy Now” button from the listing entirely.

A suppressed Buy Box doesn’t make it impossible for customers to find and buy your product, but it does make it harder to do so. For customers who consider convenience a top priority—and many Amazon customers do—that could be enough reason not to complete the purchase.

How Amazon Determines Competitive Pricing for Products

Amazon uses pricing data from other retailers to establish the Competitive External Price for products, which then influences whether it shows or suppresses the Buy Box. Determining whether a vendor’s price is less than other available options may seem straightforward, but there are a few different factors Amazon considers to determine what counts as competitive pricing:

• Average selling price is calculated based on the average price of a product sold on Amazon in the past 60 days weighted by units sold, excluding promotional deals
• Price by Amazon is the highest price a product shipped and sold by Amazon has been listed at in the last 14 days
• Per-unit derived price is the price-per-unit of a Featured Offer from a smaller bundle of the product, multiplied by the number of units in your listing
• Product list price is the suggested retail price of a product according to the manufacturer, supplier, or seller

These numbers help Amazon determine how a product’s pricing on the platform compares to equivalent products sold by other retailers.

How Sellers Can Maintain Competitive Pricing

Keeping your price competitive is important to making sales on Amazon. The challenge is figuring out how. Suppose other sellers are constantly changing their prices to stay more competitive. How are you supposed to consistently track their prices—including on other retail websites and marketplaces—and update your own in time?

Luckily, there’s an easy answer. SellerPulse can monitor all your ASINs 24/7 and send you alerts every time there’s a change you need to know about. That includes:

• When you’ve won the Buy Box
• When you’ve lost the Buy Box
• When there’s a change to your listing status
• Any suspicious activity that suggests a hijacked listing
• When Amazon suppresses the Buy Box

SellerPulse introduced the Competitive Price Threshold feature as part of the suppressed Buy Box alerts. You can now see at a glance when an off-platform competitor's pricing impacts your ability to capture a sale. That gives you the power to act fast. You can update your pricing to become Buy Box eligible right away, which translates to more sales with less work.

You can also view your Buy Box summary by SKU in the Buy Box report and see the losing offer details to understand why you're losing the Buy Box.

Knowledge is power when it comes to making more sales on Amazon. You can’t take a set-it-and-forget-it approach to your listings. You have to stay on top of what’s happening with all your ASINs and respond quickly to any changes. But humans can’t monitor thousands of products 24/7. You can’t even monitor one product all the time—you’ve got to sleep sometime! SellerPulse does that part for you, so you have more time to focus on all the other work involved in running a successful business on Amazon.

Stake your claim on the Buy Box for all your products and monitor Amazon competitive pricing. Start your free SellerPulse trial today.