Amazon Pricing Strategies and managing cashflow – you have to decide strategically, especially cashflow.
Software developer – looking for tools to make life easier.
As entrepreneur it’s nice to stick to creative, best outsource or automate repetitive tasks.
Did lots of online marketing, affiliate marketing etc.
PM Amazon seller from 3 years ago
Interested in profit etc.
Has own app “Shopkeeper” like Fetcher, Helloprofit
But Geared to non-technical users
Paulina has been interested in pricing for a long time.
Pricing is critical for the whole business
You could maximise out of 10 products just on pricing strategies.
E.g split testing and add-on items
Every marketplace has a threshold for non-Prime users.
Eg USA $25, UK £20
PM recommends look at product range – products below threshold eg $21 – $25.99
They’ve been available on .com for a long time
Recently in the UK/Europe. Used to be only Promo codes – 10%
You get a green tag
Most sellers are not doing it, even advanced sellers
“Coupon sharing box” – 20% off – click – “coupon applied”
“I got something for free” – a little excitement
A little more stickiness to listing
Amounts – why $3 off etc.
We generally charge around what we personally would pay the most, eg $30 for a knife sharpener.
This is the worst way to decide your price.
You are in a box created by your own financial limitations.
There are people who would pay $38 without thinking.
Base your price only on the marketplace
You want to decide your positioning, e.g., be a luxury brand in a cheap market.
Maybe everyone is similar – be different.
Eg Jungle Scout – eg $15,16,17 – I’ll charge $14
Look out for promos and season
Look at tools that show the history of the price of the top competitors
Eg Paulian’s brother is a methodical buyer – uses tools, compares products on different sites – waits for a week.
Paulina is a spontaneous buyer – if it’s under $200, she just uses the front page of Amazon.
This probably 40% of buyers on Amazon.
It’s not a generalised thing – it’s specific to price point and buying behaviour.
Amazon attracts an audience that is methodical buyers
Analyse competition: which buying type are they targeting?
Most go for methodical type buyers
Position self for spontaneous buyers.
You can’t be both cheap and good – you need to choose. Bargain or luxury end?
Decide that first then you set pricing.
There are a lot of coupon code sites – they often scrape Amazon and Walmart.com
They might pick up those if you put the coupon codes on Amazon
If you’re a popular brand, you could submit a coupon to sites like this
Find “Submit your own coupon code”
“The box of death” – if you check/tick it – coupon code is displayed.
If you do by accident, it will wipe out inventory
But you can do this on purpose.
You’ll backlink – Google signals are stronger – Amazon like backlinks
Coupons – put price higher, then compensate with coupon
Will that work? eg. $16.99 list price; coupon brings price to $12.99
If neighbour listing is $13.99 – won’t necessarily click on the cheapest one.
Subconsciously buyers may discount cheapest because it implies low quality.
Why so cheap?
Cushioning price then having a coupon code is better than being the cheapest.
The number $40 £40 – is the limit where people feel a little guilty – “go check with the wife”
Keep price under 40 to keep more spontaneous buyers.
Most Private Labellers are mostly up to $40.
There are steps – the first is maybe $40; the next $100 maybe.
In general, keep price same on Shopify etc. or even better.
Because customers will have to pay shipping – so that will be higher than Amazon deals for shipping.
Shopify should at a minimum match Amazon prices and be even lower.
Depends on traffic eg organic etc. So this simple advice might not be feasible .
There’s another struggle that a customer may have between Shopify and Amazon
It’s harder for the customer to buy with you not on Amazon.
Break around 36 minutes before breakdown!!
It’s a gross margin calculator but more of a business dashboard.
You can decide what the key things are going to be for you to focus on.
It’s designed to be very quick and easy to see P & L by profit line.
You can then dig into more and more complexity
Very nice deal for 10K Collective listeners – most software gives a 30-day free trial.
This has a 6-month free trial to analyse data and explore the tool.
If you’re a beginner, you can’t usually afford tools like this – but this is a huge opportunity to get to know the tool.
Just click the link below to get started.
Michael Veazey 0:04
Ladies and gentlemen, this is Michael Veazey from 10 k collective podcast as well as amazing FBA podcasts. You may have come across me there. This is the take a collective podcast, which is for advanced Amazon sellers, at least six, seven and eight figure sellers. And I’m delighted to introduce Pauline Amazon of shopkeeper calm and Pauline is an Amazon seller and the founder of shop keeper.com, which is a profit dashboard and profit and pricing are the sorts of things we are going to be talking about with Polina. So, welcome to the show. Great to have you here. Thank you, Michael.
Paulina Masson 1:27
Great to be here.
Michael Veazey 1:30
So first question, just a quick one. It’s always intriguing because my guests come from all over the world. Where in the world are you today?
Paulina Masson 1:35
So I am in Turkey right now. But I did live in Canada for 15 years. And I am originally from Lithuania. So yeah,
Michael Veazey 1:46
that’s my international background. Excellent. Yeah, tell us a bit more about your background. And, you know, obviously, we started out as an Amazon seller, what other sort of things have brought you to this point.
Paulina Masson 1:59
Right, so either did start as an Amazon seller, and because my real background is software developer, so I always look for tools and things that I could make my life easier as a business owner, you are also entrepreneur and everyone who’s listening is and you know that when you’re an entrepreneur, you’re trying to stick to the creative part of the process and not to you know, bother yourself the manual repetitive tasks, which can be easily outsource and delegated. So what such a thing was managing the numbers of my Amazon business and I decided to create a quick software for myself to manage the profit calculations and pulling all the fees and costs from Amazon. And that’s what today is shopkeeper. So I did start as an Amazon seller, but eventually became a full time software founder from that
Michael Veazey 2:49
next time, yes, often the path for many people and your software developer background, obviously, I guess it’s like a lot of people, I guess. They say to a man with a hammer, everything looks like a nail to a software developer, everything. An opportunity to develop a software that makes a lot of sense when as you say if you got anything gets repeated a lot, you got to start outsourcing or automating it and and that’s just a side note. But it just something to emphasize to any listening who I do know a couple of people in my masterminds who are doing a $1.5 million without any VA or anything. And I think that outsourcing and automating is absolutely critical. Because you can’t grow any further without going crazy. For that point.
Paulina Masson 3:24
He will Univ space in your mind first, right? I will just very important point actually, you leave some space in your mind to have the creative power, right? And then you can strategize about things like numbers, profitability, all the things that are important if you just bother yourself with the manual things that you have to do every day basically lose out on on the creation of new products, new ideas, new ways to grow your business. That’s definitely very important.
Michael Veazey 3:50
Yeah, I can hear the passion in your voice about that. And I couldn’t agree more. I think it’s funny how. And I know this is you know, we focus on pricing and profit. But this is subset of business, right. And I think running and creating businesses is a job in itself. And I think people at the beginning there’s there’s sort of two, three levels of this, the beginning, everyone gets pretentious goes to lots of seminars and doesn’t actually have any profit, any revenue of any kind, I think at that point, you need to get down to mechanics, get your hands dirty, and actually get something happening. But the next stage, people often get stuck out, I think I see this quite a lot the people are doing well, they’ve made you know, maybe a million dollars a year or something in revenue with maybe one VA or something in a tiny team. And I think they if they’re serious about scaling bigger and revenues, one thing but you know, the selling price if your business is based apart from anything else, mostly as multiple of the profit or the EBIT, da right, so, you’ve got to grow that. And that’s a, that’s a harder number to grow. So million dollars revenue, and you know, maybe 100,000 profit is not going to give you a retirement level income. So it’s the question of how do you ambitiously scale it and I think people get stuck at being, you know, doing the tasks themselves, getting the hands dirty, is all very well, understanding the tasks. But I think the strategic level, I’ve been amazed in the masterminds over the last 20 months or so, just how important has been for people really pushing their businesses forward more than I would have imagined. I mean, even in my most optimistic way of looking at it. So yeah, what are your thoughts on that? Because obviously, you’re very good. So that were thinking I know, for our conversations before,
Paulina Masson 5:22
exactly, you know, the thing is that it’s hard to let go of the control, right? Because you are the one who knows everything best. And you are the only one who knows how to do it well, and you know, too, but I’ve listened to an audiobook recently. And what it said is, it’s okay to hire someone else who’s a mediocre, because then you can create other big, big things and hire more, more people who can keep repeating the lesson, even if a person is mediocre CEO who’s sitting instead of you, he’s still going to achieve more by repeating over same thing and same thing and same and constant consistent. Because you as entrepreneur is very common feature common threads, not to stick to one thing for very long, right. So if you hire someone else who can repeat the same thing over and over and over what’s been successful, it’s very nice to keep growing your business steadily while you focus on just the growth part I to on top of that, so the business is continuously growing with another person in there. And that person is learning becoming better at the same time, while you are just focusing on how to grow it, how to push it forward. And one of my favorite topics is the pricing and profit and how to manage your cash flow and these things, you know, you can’t just let it go, you have to sit and strategically decide where you’re going to put your money, how you’re going to spend that like how it’s gonna affect the your numbers, six months down the line, you know, maybe you’re gonna buy too much inventory today, and then you’re gonna run out of money six months later, you know, Amazon is very, very cash flow intensive business. And it’s important to have time in the day to sit and think about it to clear your schedule to have time to think, you know, it’s just too so myself. Me too. I am trying to not. I like how my emails automated, the, you know, managed by someone else, and so on. Just to have as much time to think in the day is possible to strategize on things.
Michael Veazey 7:23
Like it’s time to think yeah, I think there’s a couple of very famous people that have taught us about the the need for thinking I think even go to back in the day night, this isn’t unusual. There’s no free the free does. I picked it up from base camp founder. Yeah. That was his original idea base camp. And let’s see. Yeah, I think even back to that the German novelists and poets or something like that thinking is such hard work that most men just avoid it. And he said men, but it’s true for women, the end the sense in the base camp founder, I think a lot of people make time for thinking he was a really smart CEOs, like Jeff Bezos, famously yourself, was rigorous about that kind of thing. So let’s come back to the pricing thing. But let’s think of it then from a strategic point of view, you’ve mentioned managing cash flow. So you got to decide that strategically, we’ll come back to that. But let’s talk first about a very more sort of tactical topic, if you like, but I guess I think is tactical, but maybe that’s completely wrong. Maybe its strategic, which is pricing. So tell us about pricing, because obviously it’s something we we are very, very conscious of on the sort of day to day level, on the one hand, and on the other hand, perhaps it’s something that we all deal with in a rather sort of piecemeal tactical way. And maybe there’s a strategic way of approaching it. So that was a messy question about pricing. And then the detail,
Paulina Masson 8:41
pricing is definitely a topic that I’ve been interested for a very long time longer that I have been an Amazon seller, because I’ve done previous different businesses before. And pricing strategy in general is what decides your faith as an entrepreneur and as a business owner. So if you can manage your pricing structure well and increase your profits nicely, you can reap the benefits of the same amount of work, you know, let’s say if you have 10 products, and you’re selling them on Amazon, you could maximize on those 10 just by your pricing strategy, you know, get the most of it, rather than spread yourself thin and getting many products with low profit margins, and so on. So, you know, when I talk about pricing, usually there are two big sections that I guess I could talk about. It’s either the pricing psychology, so the psychology of the numbers, and how I’ve picked that up from different sources online, how they do the pricing psychology in other fields, and they have applied that to my own Amazon business and my own pricing. So I could share some of that if you like. And the other part is just a few practical things within Seller Central and in general practical things, what you can do as an Amazon seller with your pricing, such as split testing, there’s a thing called an add on items and things like that.
Michael Veazey 10:05
Great. All right, well, let’s let’s talk with the let’s do the quick practical win on Seller Central, my instinct is go for the bigger picture. And I think that is probably where the longer term value is. But people want something quick and actionable. I know from my meetings, I want to go home from a mastermind meeting and go back a team and say right, implement this 10 jobs, which is a fair point. So let’s give that immediate payoff value. And then let’s get to the bigger picture. So tips and tricks for Seller Central, the hacks first please.
Paulina Masson 10:34
Alright. So the number one thing is that I could suggest, you know, let’s talk about free shipping. What I mean by free shipping is you know how on Amazon, every marketplace has a certain threshold. So in the United States, you have to spend $25, if you are not a Prime member to get free shipping, right? And then then every country, the threshold is the front. So let’s say in UK is 20 pounds. So now what I recommend doing is look at your existing product range sold, sit down and look at your listings, do you have any product prices that are just below the threshold? So let’s say in United States, if you have anything between like around $21, I would recommend increasing it just above $25 threshold, so make it 2599, for example. Now what do you get out of that, first, you immediately get four extra or five extra dollars profit, which is a huge amount, you know, because most of our products are about $30. So you we are mostly making like $7 profit on each item, most of us on average to get an extra $5 profit on item is huge, you know, just one thing, good. And second, the customer will suddenly have free shipping, but in total will pay less. So if your price was originally 2099. So the $21. Now what the shipping, they would have paid 2650 with the Amazon shipping, but when you make it 2599 of shipping is free. So they actually instead of 2650, they’re only paying 2599, which is $26 for it’s just so even less, the customer is paying less you are getting $5 profit. And on top of that you are now in the search results for the very popular feature on Amazon. So on amazon.com, or all these marketplaces free shipping checkbox on the sidebar, that is highly used feature on Amazon. So you know when they filter by free shipping, you suddenly will appear in the results. So my suggestion is go today and check all your listings, what do you have just under the shipping free shipping threshold? And then increase that to be just above to monetize on that? One? Very
Michael Veazey 12:47
nice. Okay, good.
Paulina Masson 12:48
All right. So there’s another one I can tell you. It’s not really any trick, so to say. But it’s something that most people do not use, even now, though it exists. So what I’m going to talk about is coupons. coupons have been available on.com marketplace for a very long time. And to UK, they just came recently only It used to be that you only have promotions, you know those save 10% off on something. But the coupons when you have a little green tag on your listing in the search results, it became just maybe eight, eight or nine months ago available in European marketplaces. And even though it exists most sellers are not doing it. To my surprise, even advanced sellers are not doing it. Now the benefits of even doing it. What do you get? Well, the first thing immediately is the personalization of the product, you will see pulling our Wait a minute, personalization. How does the coupon make your listing personalized? First of all, personalization is very important. We all know that, that if I’m looking at the listing as a buyer, I only look at it from a personal perspective, sir. Well, this guy will match with what I have in the house. Well, this you know, things like that. I’m just looking how it personally affects me, I don’t care about you as a seller how good you are, what guarantee you give you I just care about me, me, me. And the coupon has this magic about it. But it actually gives you look what happens I grow there. And I see there was a coupon checkbox in the listing. I like, wait a minute, why do I get a coupon it says click here to get 20% off what I just click and it says coupon applied. Now as a buyer, I suddenly feel happy and lucky. Oh, I got some for free. This is a one time promotion leave understand now. Because maybe you know, there’s this little bit of excitement that happens under underneath the coupon you know, so just I bet it for no reason, you know, and you check, check mark the box, immediately you add some personalization to a listing and this a little bit more stickiness to it as well. Because then I want to click the Add to box to see how much of a discount I’m getting. And then once I’m so invested in the listing and clicking I am much more likely to convert. So just having the coupon there is very important. And when I talked about the pricing psychology a little bit, I could tell you which coupon amounts you could use, you know, why is it better to use three years of not $4 off and things like that. And one more thing I will touch upon on the quick tips. In the when you’re deciding your pricing, most of us how we decide the pricing is we just I am selling a knife sharpener. And I personally would never pay more than $32 for that item. So I don’t even charge the moment though, because who’s gonna pay more than $32? On a knife sharpener? No, no. So I’ll just most of us just charge whatever we feel we are capable of being the most right for that item. But this is the worst way to design your price, you should try to climb out your financial limitations box when you are designing the price. So let’s say you’re making good money, but not so much money, right. So you are now suddenly in a box, which is only able to afford the 31 or $40 for the knife sharp, right. And you don’t even think about that range would exist outside of your box, you know, there are people who can pay more, and who wouldn’t even think about the price that much can be 3638. And they not gonna even bother to, to feel the difference, right. So you have to try to put yourself outside of it when you’re designing and base your price mostly on the existing market situation. So you have to look at the prices of other listings and decide how you want to play it, you know, there could be everyone is doing bargain, bargain bargain, cheap, cheap, cheap. So maybe you want to be that luxury product, which doesn’t exist one time one of a kind, who charges more, you know, and be the luxury brand. And you know, position yourself as such, and then you can charge more money, everyone is doing the, you know, everyone is in a similar range very, very close to each other in will try to be a little bit different from them apart. So just play with whatever the market is you feel is demanding. That’s what you should get set your prices on. One more tip about looking at the market is to not base your decision on a snapshot of today. Like if you open the listings today and you look at Jungle Scout or or whatever you just open and you look at competing listings. Don’t ever just trust, okay, these guys are charging 1516 and 17. All right, I’m going to be 14. Don’t ever do that. Because they may be running a promo, or something can be happening like a season, you know, in Christmas, they’ll charge more because it’s running out or something like that. So you have to open the historical, you know price. So use tools again, like Jungle Scout, or there’s many, many different tools that show you the history of the price. So MRI was your most harsh fierce competitors on the first page and see what the pricing history was. And from that stick the average price and look at that only one you’re basing your decision. So there’s one thing other I will just mention that is related to that when you’re playing on the price and trying to choose to be cheaper one or the more expensive one. Now you’re not sure like which which side you should play on? Well, there are two kinds of buyers. There’s the spontaneous buyers who buy it quickly. And there’s the
slower like methodical buyers. So my brother, for example, he was this methodical buyer. So whatever he buys, even if it’s very cheap, he will go and research on you know, different websites, he has all these software’s and tools, the compare the prices, then she will keep thinking about it for a week before he makes a decision, right. So he finds the best deal that she can ever have, right? All the best coupons of Google’s for coupon codes and things like this. Me I am the spontaneous buyer, I just look at the first page results of Amazon. And if it’s an amount less than $200 I don’t even think about it too much. I just buy whichever I like better as I from the personal affections if I like the image better or matches with something that I have personally better than I by that one. So you see there are two kinds of buyers. This is not really a person. So when I would ask you now which one are you? Are you spontaneous? Are you methodical, you couldn’t even say that I’m always like that I’m always I got most of us in some cases do this. So most of us when the price is higher, we are more of a methodical when the price is lower, we are more of a spontaneous maybe. So the type of buying that is spontaneous happens 40% of the time, this is based on the blog information that I read. And the type of bed is methodical it happens 60% of the time. So this is very likely and this Amazon data. So this is very likely because Amazon has built as a platform, which is very cheap, affordable things right as many things as you can have and most affordable. So that means that they attract the audience, which is more of this methodical buyer, they attract the audience, which are looking for better deals and cheaper prices. That’s why there are 60% of them are shopping on there. So now you when you look at your current prices of other competitors of their historical averages, you should think which target market team you’re targeting which the one they are catching. So now if they are selling to these methodical buyers being the one who selling to spontaneous buyer, so stick the same item you are selling Daniel manufacturer, okay, let’s make it a little bit more fancy. So let’s add the word bag here and the box. And then let’s add this extra item there to make it more luxury, and then increase your price vastly to be different. So very different from the other guys to appear as a luxury product. So it’s not enough to just look at prices also look whether your competitors are serving this market of methodical buyers or the spontaneous buyers, and then position yourself as one you cannot be both you cannot be both cheap and good. No, you have to choose eventually. Which one are you? Are you the bargain product or user luxury product. And once you made your choice, it will be so much easier to decide your prices from that, you know, so once you know your luxury, you know you’re going to charge more you can you know all these things, while the pricing strategies related to that will be birthed into the base that you are the luxury price. So first decide that and then from that they will grow all of your pricing strategies.
Michael Veazey 21:31
Nice. Okay. Well, I think you’re inadvertently moving from the tactical into the more strategic level, which I like is very, which is excellent. I love it. But
Unknown Speaker 21:41
I like this.
Michael Veazey 21:44
Yeah, it has to feel very fascinated by this, about something incredibly practical, actionable and critical number the pricing, I think it’s it’s amazing to me that I haven’t had anyone talking about it before. So not really as methodically as this. So very, very interesting. So couple of quick takeaways then decide, I think it’s kind of a we will used to the idea of deciding where they’re going to be that the affordable the bargain, you know, good value for money as it were or the luxury I affordable still probably an Amazon given that most people are on the lowest sort of end of the the pricing scale when they’re buying but still the affordable luxury and a clear pricing decision. But I think what’s very interesting to me is that that’s a product centered business, you know, centered ourselves idea is network, as you’re saying, what we’re really doing is putting different beta into the marketplace. And we’re after we’re trying to land the different fish either a methodical buyer or spontaneous one. And we’re going to decide which one we’re after, which is very in sync is actually completely different virtues of your product that’s going to attract them. So my one obvious question is, okay, I’m trying to want my cake and eat it here. How can we? This is an off Amazon thing. So the bigger picture question around pricing, but how can we deal with those people who are going to Google our product name or a brand name? And you know, look at the results, whether it’s our website, or social media results, or YouTube, what can we engineer off Amazon to drive a better price on Amazon?
Paulina Masson 23:12
Actually, there’s one, one thing you can do as a trick testaments, and because it popped in my mind right now, you know, there are so many coupon code sites that are providing, you know, deals and coupons. And very often they are scraping Amazon content and other big marketplaces like Walmart. com, they’re scraping those and building their websites from that content. So if you are more of a popular brand, you could potentially monetize on that by submitting your own promotions. To them, there is at the bottom of all these coupon biggest coupon sites. So go to your VA and tell you know, find me the biggest coupon websites. And at the bottom there is like submit your own coupon code or submit your own something. So there’s coupon codes that you create as a promotion on amazon seller central, you can use by putting them in to these coupon code websites. And that will or sometimes they automatically pick up on yours if you make those available on the listing. So most advanced sellers will know such a thing, which is called a box of death, when you’re creating a promotion. And I’m not talking about coupons, I’m creating a promotion on Seller Central, there is a box which is very non descriptive name. And I even forget what it says it says something like displayed page listing something more descriptive like this. And if you check it, your coupon, your promotion code becomes available to everyone publicly on your listing. And that has killed many sellers, by selling their inventory like you for free. Like, for example, if you create 100% off coupon, and then by accident, you check box the box of death, then the missing that sold out in five minutes, you know, because it’s free, then we lose all the inventory. But who are you on purpose with us the box of death by creating let’s say at 25% off or maybe a 40% off to be more significant, and then create enabling it to be accessible publicly on your listing, then it’s very likely that those coupon sites will scrape the listings that I’m the better seller. So just for argument, doing it on your best sellers from your product range, and they would publish it on there. So there you back to your question about external traffic, how we can help it, it actually helps a lot. If they scrape it or you manually submitted to them, then automatically you have a backlink, then the Google signals are stronger, and Amazon likes the external traffic signals. And then it you know, all these things people may be clicking and so on. So it builds up the strength of your listings as well.
Michael Veazey 25:53
Okay, well, it’s good stuff. So in terms of getting traffic, I can understand how that would definitely work out. Does that work? How do we keep our profits? Is that just a strategy for launching? So when we don’t care about profits, per item, or we is this an ongoing sustainable way of doing things? And if so, how do we do that?
Paulina Masson 26:11
In general, if you’re asking about the difference of pricing between your Shopify site and Amazon site, for example. So I would highly recommend to keep it consistent. You probably didn’t. Did you mean that?
Michael Veazey 26:23
That’s not particularly what I meant? Although it’s a very interesting point, we should talk about that in a second. Actually, I was thinking more about if you’re obviously if you’re trying deliberately to get your coupons scraped, or even, you know, making a very obvious to everyone or submitting your coupons. How if we’re using coupons to reduce the selling price, right? How do we keep the profit? Right?
Paulina Masson 26:42
Yeah, so coupon giving coupons does not mean that you have to reduce your price that you have right now. So you basically would question your price to be higher, and then compensated with the coupon. Now, you know, he will say, wait a minute, but now I am 1299, I’m going to be 1699. So nobody’s gonna buy me All right, even there is a coupon shining there, you know, maybe they will not make the calculation. Well, in fact, if you’re comparing yourself with the neighbor listings, and the other guy is, let’s see, 1499, and you are 1699 with a discount, it doesn’t mean that people will click on the lowest priced one. Because when I’m looking at the range of similar items, and they all were the similar prices, somehow subconsciously, I always discount the cheapest one because cheapest one associates with like a lowest lower quality one, right. So you know, you don’t want to buy the very cheapest out of 20, that you sort of pre selected already on the page, let’s say you’re looking down to four now. And the one is like 1199, and all the others in between 14 $15, you are discounting immediately at 1199. One because you think oh, maybe something’s wrong with it, or fears we had why so cheap, you know, says it’s very often associated with the local quality than the discount that so pushing your price a little bit. And then with the discount, maybe being as cheap, as the cheapest guy, you know, is better positioning than being plain cheap guy, it’s better to cushion your price and have a coupon amounting to the same buying price in the end, you know, so you shouldn’t be scared of raising your price a little bit. There is one limit, though, of when you’re raising the price, you know, to cushion for that there is one number you should be aware of is a little bit of with the psychology, the number for you, you know, they say that the number 14, so 40 pounds, $40 40 euros, whatever the 40 is the limit, when when you are making a purchasing decision, you feel a little bit guilty and have a little bit of extra second to think about it. Or as they say informally, you have to go check with your wife, you know, it was ok to buy it. So basically, if you have a prices that are just above the 40, I would still recommend keeping them under 40. So in that case, I would have to dip into your profit, like I buy $1 or something just to have a coupon there. So that’s the only case when I wouldn’t jump over if you have right now. 3899 or 3999, I wouldn’t go over 40 to become a 42 does because psychological over $40 is the the ceiling where you know people start feeling uneasy with the purchase. And under 40 is just so easy. You know, you just spend it. Yeah.
Michael Veazey 29:28
I was just thinking about these numbers. I mean, thank you for the tip. That’s it, by the way very profound idea that price is a positioning tool, as I remember a business case for me, you know, 10 years ago, very true that the idea that we don’t want to be the cheapest, we have this anxiety that because Amazon is a very price driven marketplace. But also, let’s face it, they’ve developed the fastest consumers in the world, as we know from our one star reviews. So right, you’re right that that staying over the bottom is very important. So you’re basically I guess, attracting the methodical buyers by you know, looking like value but not the cheapest. That’s probably also the way they think. But the The other thing I wanted to just reflect on is this limit. I mean, when you said 40 pounds limit where you go check with away from I have a wife, but I certainly check with her about what I feel is significant things but for me, I think their limit that I would check with my wife be several hundreds of episodes quite NC how personal eliminates I think I’m I’m kind of a gift to anyone selling things because I’m very spontaneous buyer, and I like you. But I don’t have like a price limit that $40 I’m like, well, it’s about 100 pounds. That’s a bit
Unknown Speaker 30:34
Michael Veazey 30:35
me about eight pounds. But it’s a very personal thing, isn’t it? And I think you’re right, that actually, it’s so interesting to catch one’s own limits, because you realize, okay, that’s my buying behavior, fine, that doesn’t matter. But if that influences my behavior as a seller, then that’s incredibly important to be aware of what’s my personal price limit? And is that affecting, unconsciously, what I’m doing for my pricing for the people.
Paulina Masson 30:58
And I think the 14 was closing it synced with the what kind of audience we have on Amazon. And we have those bargain hunters, right. So I think that the 14 is very nice to plus most of our products, most private label products, at least are like, you know, under the 40, we have a lot of furniture items and so on in the washing machine, so on. But those private labels that you know, start and go with the flow for a few first years, we are mostly around that price range, you know, so the $40 is a bit of essence, you know of that first limit, I believe that there are some sort of steps, you know, there is the first one at $40. And the next one, there is no exception. Next one, maybe the hundred dollar one, and then the next one. So there are steps in that struggle that gets harder and harder as you go. Now, so maybe you just skipped over one being a spontaneous.
Michael Veazey 31:55
You mentioned Shopify and Amazon as the classic places where people sell how we deal with price consistency or inconsistency between the channel Should we keep the price the same? Should it be allowed to be different,
Paulina Masson 32:07
I would definitely keep your price the same. And if you can afford it even better priced on Shopify, because on Shopify, people who don’t, you know, they will have to pay the shipping fee, if you don’t offer the free shipping on your Shopify website, that automatically means that the shipping that you will suggest will be obviously higher than the Amazon’s deals for shipping because they have negotiated good rates with ups and so on. So because of that your Shopify prices should minimum match the Amazon prices and be even lower if you are not doing the free shipping for them. So again, it’s a completely different world, you know, with the Shopify, it will depend on how you’re getting your traffic, you know, if the traffic is organic, how it’s converting, and also, all these other factors that are not relevant to us on Amazon will have to be taken into continent, you know, what’s your cost of acquisition for each customer, and then you will know your profit margin and how you can play with it. So sometimes just simple advice, like Polina just said, you know, match your prices, Amazon might not be always be feasible. So look at your own situation, you know, because there are so many more factors working there. But in general, when from the person who is buying perspective, it’s obviously very good, if you have a price, which is the same, you know, so then he could choose which one to choose from, there’s another struggle that customer may have when choosing between your Shopify and Amazon is that you know, they trust Amazon, and to trust the Shopify site, which you know, is unknown to them might be harder to you know, to leave your credit card number in there. So that’s again, this little bit of if you want to bring on the price to convince them to shop on yours and not on Amazon, then you should definitely be like $1 or two cheaper, at least, you know, or or some amount that makes their efforts worth it, you know, to trust you. And some so definitely so many factors working into that formula, you know, you have to sit by the whiteboard and just try to write down brainstorm a little bit of things when you are creating is a whole different talk. I could talk about that strategy, you know, how to come up with your Shopify prices. So small bits would be phenomenal smash, but yeah.
Michael Veazey 34:27
That sounds like a really good topic. I mean, for the moment we’ll keep that on we’ll get you back. You’ve just kind of been giving me a definite yes, we’ll have that police work to buy that. But I think we keep moving for the Amazon for the moment because that is the main focus of what we do. Although we definitely most serious businesses that I know have more than one channel. Sometimes that might be their own website is retailer. Sometimes it’s selling direct to big box retailers. It does very actually say thanks for listening to the 10 k collected podcast.
Transcribed by https://otter.ai