# HOW SMEs CAN INCORPORATE AMAZON’S SUCCESSFUL PRICING TACTICS INTO THEIR OWN STRATEGY
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-22
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Boost Your Ecommerce Success with Dynamic Pricing Strategies
Meta Description: Discover Amazon's pricing tactics and Omnia Retail's tips for SMEs to replicate success. Learn how to determine markup, set healthy margins, build a
URL: https://financedigest.com/how-smes-can-incorporate-amazons-successful-pricing-tactics-into-their-own-strategyhtml

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Amazon has a relentless commitment to the customer experience – everything it does is guided by its goal to be the most customer-centric company in the world. As such, Europe’s first dynamic pricing software [Omnia Retail](https://www.omniaretail.com/) analysed the company’s pricing tactics and gives advice on how SMEs can replicate some of its success in their own ecommerce ventures.

In any retail business, it is important to determine how much markup you want to add to your online products and set healthy margins. For low margin products, consider raising the price or strategically bundling the product with a high-margin product. You can also try to [cut production costs](https://www.financedigest.com/uks-sunak-under-fire-over-cost-of-living-defends-his-tax-cut-plans.html "UK’s Sunak, under fire over cost of living, defends his tax cut plans"). For high-margin products, it may be worth it to [increase your marketing](https://www.financedigest.com/bicycle-market-growth-to-surge-owing-to-increasing-adoption-by-end-use-applications.html "Bicycle Market Growth to Surge Owing to Increasing Adoption by End-use Applications") spend, shoot for cross- and up-sells, and devoting more time to the product.

Amazon wants to position itself as the most convenient company with the lowest [prices and the best customer](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem") service out there, and one of the ways they do this is through a dynamic repricing strategy. OmniaRetail’s 5 [tips to build a successful](https://www.financedigest.com/tips-on-how-startups-can-turn-their-business-into-a-success.html "Tips on how startups can turn their business into a success") repricing strategy include:

1. **Define your commercial objective**

Some shops have a clear [market penetration strategy to capture market share as](https://www.financedigest.com/global-splined-sleeves-market-size-share-trend-growth-forecast-to-2031.html "Global Splined Sleeves Market Size, Share, Trend & Growth Forecast To 2031") their company objective. Other shops offer [value-added services](https://www.financedigest.com/why-the-banking-industry-needs-to-offer-more-than-just-enticing-perks-and-subscription-services.html "Why the banking industry needs to offer more than just enticing perks and subscription services") such as free quick delivery, great customer support, or long payment periods. Regardless of what your offer is, you should understand it thoroughly before starting dynamic pricing. The commercial objective is, in many ways, a compass for your business, and will help you form a dynamic [pricing strategy](https://www.financedigest.com/global-compressor-controllers-market-outlook-2021-pricing-strategy-industry-latest-news-research-report-analysis-and-share-by-forecast-2028.html "Global Compressor Controllers Market Outlook 2021, Pricing Strategy, Industry Latest News, Research Report Analysis And Share By Forecast 2028") that helps you reach your specific goals.

2. **[Build a pricing](https://www.financedigest.com/oil-prices-ease-on-u-s-inventory-build-china-covid-worries.html "Oil prices ease on U.S. inventory build, China COVID worries") strategy**

If your commercial objective is to [increase visibility but also capture profits](https://www.financedigest.com/4-tips-for-landlords-to-increase-rental-property-profits.html "4 Tips for Landlords to Increase Rental Property Profits"), you might want to follow the “high-runner” strategy commonly used by Amazon. In this strategy, you draw traffic to your store through extremely competitive prices [on a small selection of your most popular products while capturing margins](https://www.financedigest.com/explainer-oil-price-surge-changes-ecb-narrative-only-at-the-margins.html "Explainer-Oil price surge changes ECB narrative only at the margins") on your less-competitive products. It’s counterintuitive, but once visitors are in your store for one [specific product](https://www.financedigest.com/host-analytics-up-ends-the-enterprise-performance-management-market-with-the-first-product-designed-specifically-for-business-users.html "Host Analytics Up-Ends the Enterprise Performance Management Market with the First Product Designed Specifically for Business Users"), they’re less likely to navigate away for a smaller, less popular product.

3. **Choose your pricing method**

There are a multitude of methods to choose from, but three of the most basic are:

- Cost-plus pricing, in which you take the cost of producing a product then add the desired margin on [top to find the sale price](https://www.financedigest.com/4-for-the-price-of-1-what-you-can-buy-in-the-uks-top-northern-cities-for-the-price-of-a-london-pad.html "4 for the price of 1: What you can buy in the UK’s top northern cities for the price of a London pad")
- Competitor-based pricing, in which you [follow your competition’s](https://www.financedigest.com/tmwi-appointed-by-zupa-following-a-competitive-pitch.html "tmwi appointed by ZUPA following a competitive pitch") prices
- Value-based pricing, which considers the [consumer perception of the product in the pricing](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength") process

4. **Establish pricing rules**

If you choose to price based on elasticity, you let the algorithms make most of the decisions and there is less to [set up in the pricing](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out billion aid package for Italy clients hit by surging prices") rules. For example, if [stock levels drop](https://www.financedigest.com/stocks-advance-u-s-dollar-retreats-as-china-drops-quarantine-rule.html "Stocks advance, U.S. dollar retreats as China drops quarantine rule") below a certain point, consider following the average of key competitors.

5. **Implement, test, and evaluate the strategy**

Once the first 4 [steps are complete it is time to implement](https://www.financedigest.com/12-steps-to-implementing-off-payroll-ir35-compliance.html "12 steps to implementing Off-Payroll (IR35) compliance") dynamic pricing. After going live, it is [important to monitor the pricing strategy](https://www.financedigest.com/minding-the-gap-the-importance-of-inclusive-financial-strategies-as-digital-currencies-rise.html "Minding The Gap: The importance of inclusive financial strategies as digital currencies rise ") and evaluate if it is helping you reach your objective. If your goal is to capture more [market share](https://www.financedigest.com/oryzanol-market-share-size-analysis-growth-industry-statistics-and-forecast-2028.html "Oryzanol Market Share, Size, Analysis, Growth, Industry Statistics and Forecast 2028"), but you are not able to increase your volume of units sold or your overall sales, it might be time to re-evaluate the objective.

For more information, visit: [https://www.omniaretail.com/blog/the-strategies-behind-amazons-success](https://www.omniaretail.com/blog/the-strategies-behind-amazons-success)


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