The 6 Most Common Pricing Mistakes on Amazon
On Amazon, a badly set price costs you twice: you lose the sale or you make it with no margin. And it is nearly always down to the same mistakes.
The six most common Amazon pricing mistakes are believing the Buy Box depends on price alone, ignoring FBA, not working out your real costs, assuming all pricing software is the same, not segmenting your strategies and running out of stock. Most of them are avoided by measuring net margin and watching the competition; the stock one, by watching your inventory.
Key points
- The Buy Box, which Amazon calls the Featured Offer, does not always go to the lowest price: delivery charges, delivery time and the seller’s metrics also count.
- Amazon compares the total price including delivery, so an FBA offer at €15 competes on equal terms with another at €10 plus €5 delivery.
- Your real margin on Amazon is the price excluding VAT minus the product cost, Amazon’s commission, FBA fees and any other costs; without that calculation, cutting your price can mean selling at a loss.
- A single pricing strategy for the whole catalogue wastes opportunities: you do not compete against Amazon the same way you compete against a new seller.
- No stock means no Buy Box, and your competitors take the sale without having to cut their price.
| Mistake | What it causes | How to avoid it |
|---|---|---|
| 1. Thinking the Buy Box depends on price alone | Price cuts that do not win it | Look after delivery charges, delivery time and account metrics |
| 2. Ignoring FBA | Comparing your price wrongly with FBA or Prime offers | Always compare price plus delivery and consider FBA |
| 3. Not taking costs into account | Sales with a negative margin | Calculate net margin and set a minimum price |
| 4. Thinking all pricing software is the same | Rules that cut prices without looking at margin | Choose a tool with costs, minimums and recent data |
| 5. Forgetting to segment | One rule for very different situations | Rules by competitor, FBA, margin and product |
| 6. Running out of stock | Losing the Buy Box and sales at demand peaks | Watch the inventory of your best-selling products |
1. Thinking the Buy Box depends on price alone
Whoever holds the Buy Box gets most of the sales for that product, because theirs is the offer behind the buy button. The mistake is believing that offering the lowest price is enough to win it.
Amazon does not publish the exact formula, and price is not the only criterion. Amazon also monitors account metrics such as the order defect rate, the late shipment rate and the cancellation rate; if they go over the thresholds set in Seller Central, Amazon can restrict your selling privileges.
Because price is not the only criterion, a seller with a very competitive price can lose the Buy Box to a more expensive one who delivers faster with Prime. If your metrics and delivery times are good, a cut of a few cents may be enough, or you may not need to touch the price at all. The full picture is in the guide to how the Amazon Buy Box works.
Before cutting a price on Amazon to win the Buy Box, check these five points:
- Who holds the Buy Box now and what their total price is, delivery included.
- Whether that seller ships with FBA or Prime and you do not: the difference may lie in delivery time rather than price.
- Your account metrics in Seller Central, such as the order defect rate, late shipments and cancellations.
- Your available stock: with nothing in stock, the price cut will not get you the Buy Box.
- The margin the new price leaves you and whether it is still above your minimum price.
2. Ignoring FBA
FBA (Fulfilment by Amazon) is the service in which Amazon stores, packs and ships your orders. FBA products are usually shown with the Prime badge, which makes the offer visible to Prime members and signals fast delivery, a factor that weighs in the Buy Box.
The most common pricing mistake with FBA is comparing the wrong figures. Amazon compares the total price the customer pays, delivery included. If you offer a product through FBA at €15 with free delivery, you are level on price with a competitor selling it at €10 plus €5 delivery, and you will probably beat them on delivery time.
FBA has its own costs (a fulfilment fee per unit based on the product’s type, size and weight, monthly storage and charges such as long-term storage or removals), and they have to go into the margin calculation. The guide to selling on Amazon FBA explains how the service works step by step.
3. Not taking costs into account when managing prices
Not taking costs into account is probably the most expensive mistake on the list. Without knowing your margin, a price cut to win the Buy Box can leave the product below its real cost, and every sale loses money.
Your margin on Amazon is calculated with all of these items: the product cost, the VAT included in the price, Amazon’s commission per sale (such as the referral fee), FBA fees if you use it, delivery costs if you ship yourself and the Professional plan subscription, €39 a month excluding VAT on Amazon.es, spread across your sales. In Spain, Amazon also charges sellers established in the country a 3% digital services fee on the referral fee.
An example with assumed figures for Amazon.es: a product that costs you €12, an Amazon commission of 15%, the rate in many categories, which Amazon calculates on the total price the buyer pays (in Spanish), VAT included, and an FBA fee of €3.50 per unit. The example uses Spanish VAT at 21%, and the VAT on Amazon’s fees is left out because a business can usually deduct it. To keep it simple, the example does not include the plan subscription.
| Item | Price of €30 | Price of €26 |
|---|---|---|
| Price excluding VAT (price / 1.21) | €24.79 | €21.49 |
| Amazon commission (15% of the VAT-inclusive price) | −€4.50 | −€3.90 |
| FBA fee | −€3.50 | −€3.50 |
| Product cost | −€12.00 | −€12.00 |
| Margin per unit | €4.79 | €2.09 |
The example does not include the digital services fee: if your business is established in Spain, add 3% to the commission (about €0.14 per unit on a €4.50 commission and about €0.12 on €3.90).
Cutting the price from €30 to €26 (13%) reduces the margin per unit from €4.79 to €2.09, that is, by more than half. With these figures, the price below which you lose money is around €22.92. That is the floor a pricing rule should never cross, and the full calculation is in the guide to profit margin calculation.
4. Thinking all pricing software is the same
Amazon pricing software is not just there to make prices change on their own with a simple rule, or to display data and leave the rest to you. Tools differ in what they can calculate and in what they do with that calculation.
- The tool should let you add costs so it can show your current margin and the margin you would have with each price change.
- Competitor data should be recent enough for the pace of your category: on products with many sellers, yesterday’s price no longer describes the market.
- Automatic dynamic pricing rules should revolve around margin and respect a minimum price: the goal is not always to sell cheaper, but to sell at a profit.
- The system should take into account whether you or your competitors sell with FBA. If you are on FBA you may be able to keep a slightly higher price and still win the Buy Box; if the competitor is on FBA and you are not, you will have to adjust more.
Amazon offers a free tool in Seller Central, Automate Pricing, with rules based on the Featured Offer and the lowest price. How it differs from an external repricer, above all in margin calculation, is covered in the analysis of Amazon Automate Pricing versus Boardfy.
5. Forgetting to segment your pricing strategies
A good Amazon pricing strategy changes with the scenario. Competing against Amazon itself as a seller is not the same as competing against a new seller with few ratings, and the pricing rule should be different in each case.
The factors that change the scenario are the fulfilment method (FBA or not), who holds the Buy Box, the product’s margin, the specific competitor, the brand, the country the competitor sells from and the product itself. A standard rule for the whole catalogue leaves margin on the table where you could go higher and loses sales where you should adjust.
Segmenting also protects you from a risk in the other direction. An offer priced well above the product’s recent prices, on or off Amazon, can stop being eligible for the Featured Offer. A rule that raises the price when there is no competition also needs a ceiling.
6. Running out of stock
An offer with no stock cannot hold the Buy Box. If one of your best-selling products sells out, your competitors sell in your place without having to cut their price, and may even raise it.
The impact grows at demand peaks such as Black Friday or Christmas, when a stock-out coincides with the highest sales volume of the year. With FBA, shipments of stock to Amazon’s warehouses have to be planned in advance, because restocking in the middle of the season can arrive too late.
Watching the stock of your best sellers, and your competitors’ stock, is also pricing. When a rival runs out, your product can hold a higher price for a few days without losing the Buy Box.
How do you protect your margin while competing for the Buy Box?
Competing on Amazon without losing money takes knowing your net margin and setting a minimum price. Boardfy is a SaaS platform for competitor price monitoring and dynamic pricing for e-commerce, with direct price updates on Amazon, eBay, Google Shopping and Mirakl marketplaces.
- Boardfy identifies which competitor holds the Buy Box, a volatile figure that can change at any moment.
- Boardfy calculates your margin from the product cost, deducting Amazon’s commission and any other costs you allocate, such as picking.
- Boardfy carries out competitor price monitoring every 6 hours and applies your rules every 30 minutes.
- Boardfy changes the price directly on Amazon via API and never goes below the minimum you set.
Boardfy does not decide your strategy: it applies the rules you define. Try it free for 7 days, no card required.
