Dynamic Repricing and Its Benefits for Your Business

Dynamic repricing can help your Amazon business stay competitive. The SellerLogic team outlines key benefits in this guest article.

As an Amazon seller, you may be familiar with the following scenario: You sourced an amazing new product and put everything you had into its promotion. You hired a professional photographer to ensure that your pictures have the necessary detail and depth, you optimized your product description to a point that it not only depicts your product but also tells a compelling story. You even asked an Amazon SEO expert to take a quick look at the keywords.

After setting a competitive price – slightly undercutting your competition while still providing you with a solid margin – you list your product and wait for it to fly off the shelves. But, nothing happens. No Buy Box. No sales. What went wrong?

Careful planning and preparation are only the first steps – once your product is online, making your product visible to buyers will require just as much effort. For Amazon sellers, the most effective way to do this is by winning the Buy Box – which is no easy task.

Apart from many other factors like fast and reliable shipping, great customer service, and a low order-defect-rate (ODR), the pricing you set for your products is possibly the most important element that decides whether you win the Buy Box or not.

Why Is Pricing So Important?

Amazon is a pioneer in customer centricity and a global leader when it comes to dynamic pricing with over 250 million price changes taking place on its platform every day. Before this backdrop, it seems clear that adjusting your prices every once in a while will simply not do the trick, especially if you want to sell on Amazon full time.

But just how much effort do you have to invest in order to remain competitive? Because let's face it – you have plenty of other tasks on your plate. Do you really need to continually check and adjust your pricing?

What Is Repricing and How Much Time Does It Take?

Repricing is the process of adjusting the price of a product corresponding to external factors in order to make more revenue.

Let’s look at a real-life example: Anna is the owner of a clothing store and, while walking through town, realizes that her competition has dropped their prices for winter coats. Seeing that the weather’s getting colder and demand for coats will soon go up, Anna returns to her store and drops the prices for her own winter coats in order to attract more customers. The plan works out brilliantly. The customers appreciate Anna’s competitive pricing, and they are so happy with the quality of the coats and customer service that they keep returning to her store even when she starts demanding a higher price for her coats than the competition does.

Now let’s apply this scenario to the Amazon universe: Following her success in her brick-and-mortar store, Anna applies the same technique online and is now a successful merchant on Amazon. She is able to outsell the competitors on her listing due to her low prices which also enables her to win the Buy Box.

She is able to meet all other relevant Amazon metrics – such as high-quality goods, pristine customer service, and fast shipping – and thereby keep her position in the coveted “Add to Cart” field. While she has no intentions of giving up the Buy Box, she also wants to make a maximum profit, which is why she – as she did before in our offline version – plans to increase her pricing gradually until she reaches the highest price possible.

This is where Anna hits a snag. Unlike in our brick-and-mortar example, manual repricing on Amazon would take up all of her time and keep her from improving or upholding the other metrics that are equally important for her Amazon seller profile. Keeping up with Amazon, for example, would require her to change her pricing every 10 minutes. That's an impossible task if you have a business to run. She has two options at this point: Settle with sporadic manual repricing and focus on other metrics or use repricing software.

Static Repricing vs. Dynamic Repricing

A repricer is – in most cases – the more cost-efficient and accurate solution for your business. However, there are a couple of things to keep in mind when looking at different offers. Whether the repricer is dynamic or static is one of them. Let’s take a look at the differences.

Static Repricing

Static repricers analyze the competition’s pricing and adapt your prices according to the value you set. Here's an example: You set the price at $5 below the competition for winter coats. The competition sells at $40, which means the repricer will automatically set your price at $35. Should the competition go up to $45, your repricer will do the same and set your price at $40. This simple but effective method will most likely win you the Buy Box (provided your other metrics are solid too) but it will not guarantee that you sell at the highest possible price. This is where a dynamic repricer comes into play.

Dynamic Repricing

A dynamic – or algorithmic – repricer is more flexible than a static repricer. This is already recognizable when you adjust the settings. With a static repricer, you will always be restricted to setting one value (“$5 cheaper than the competition”). With an algorithmic model, you can set a price range within which you want your products sold (“between $35 and $45”). The dynamic repricer will then set the price low enough for you to win the Buy Box, and then gradually increase the value – within the given price range – to the highest option possible that still allows you to keep the “Add to Cart” field.

Circling back to our example: Anna decides to go for the dynamic version, since repricing is to remain an important component of her business model. The software she uses allows her to remain competitive but still retain a good margin due to her high Buy Box share. On top of that, her repricing solution frees up her schedule and enables her to work on other projects.

Final Thoughts

At the end of the day, a repricer is not only an essential tool for Anna or other professional Amazon sellers, but also a practical solution if you are selling on Amazon to make a little extra cash. When it comes to static or dynamic repricing, a dynamic model is typically your best option. Dynamic repricing helps you win the Buy Box and makes you as much money as possible, and also frees up your time for other important things.

Interested in learning more about how a dynamic repricer can drive more revenue? SellerLogic is here to help and has the Amazon repricer tool you need to boost profits and stay one step ahead of the competition!

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