by earthmom

#127, 25 August 2008

The Price is Right

Read more Selling on Amazon columns

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You're holding that book in your hand and here's the big question: "How much can I get for it?" After all, that is the point of the exercise. How much is it worth? How much will someone pay?

If there are other listings for your book, then it does have a market and the going price has been set by the old rules of supply and demand. If the lowest priced listing is $8, is it wise to price yours lower, say $7.95, just to be the lowest priced and therefore the next sale? One thing that has to be considered to make that pricing decision is condition of the item - is yours better? If so, it certainly deserves to be priced higher than that lowest listing. Next to look at is ratings of other sellers: If they're all brand new or have bad ratings and yours is good, you should be able to price a bit higher and rely on people trusting your product more and being willing to give you a bit more money.

One thing that new sellers are regularly warned against is "lowballing" or pricing below the lowest. It's not a good practice because you're leaving money on the table, and also because of auto repricing software that many sellers use. This software is run anywhere from daily to hourly and reprices inventory to always be the lowest. So if you price your book at $7.95, the auto repricer will drop it to $7.94 or $7.90 very soon after, and other repricers will follow, each racing to be lower and lower until that book is selling for a penny. It's a downward spiral in a race to ruin the market of that book. One way to not become involved in that race is to price yours even with the lowest, or just higher. That will put you in the 2nd or 3rd slot of the page, easily visible when the item is looked at by a buyer, and you won't be competing with auto repricers. It's usually easy to see when there are several auto repricers on one listing. You'll see prices like $15, and $14.95, and $14.20 and then a group of prices like $5.40, $5.41, $5.42 all clustered together. Each time the software runs it's lowering the price and those three are leapfrogging down and down. Best to let them go, ignore those and price yours even with the higher priced listings. Hopefully they will sell off quickly and yours will be waiting to go next at a more sensible price.

How in the world do books end up selling for a penny? That's the most frequently asked question on the Amazon New Seller's board. How does anyone make money that way? In a nutshell:

A seller lists and sells a book for $.01.

Amazon collects $3.99 from the buyer and gives $2.66 ($.01 + $2.64 shipping allowance) to the seller. (A $1.35 "closing fee" is subtracted from the shipping allowance by Amazon.)

The seller is a ProMerchant, so doesn't pay the $.99 fee (but does pay $40 per month to be a ProMerchant).

The 15% fee on 1 cent is zero.

The seller pays $2.31 or $2.65 in postage for a 1 or 2 pound Media Mail package. Or less, if it is very light weight and can go First Class, and much less if the penny seller is high volume and uses Bulk Mail.

The seller's cost for the book is zero because he or she got it for free somehow (or buys in great volume so the price per item is nominal).

The seller uses recycled packing materials, so those cost nothing, too.

The seller ends-up with $.35 profit if it's 1 pound domestic Media Mail package, a bit more if it's mailed using Bulk Mail.

The seller is happy with his "profit."

Amazon ends up with $1.35 from the shipping.

Amazon is even happier than the seller.

>>>>>Click here for page two>>>>

Questions or comments?
Contact the editor, Craig Stark

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