Fulfillment by Amazon is a program that has exploded in growth over the past year.  It is amazing how this program began with such a rocky start but now is even being attributed to eBay’s recent poor performance just this August!  FBA, as a whole, has become very successful not only among booksellers but within lots of other niches.  It seems that the idea of outsourcing order fulfillment and taking advantage of incentives that Amazon is giving to FBA participants is proving to be a 1-2-3 punch to eBay and, at the same time, really giving Amazon sellers increased sales and much needed RnR while Amazon’s automation systems take care of all the grunt work.

FBA may be a great program but with any new business process there are always items to take into consideration.  In regards to FBA, the most important item to really spend your time fully understanding is the pricing difference in having Amazon fulfill your orders vs. doing it the old fashioned way and fulfilling orders yourself.  Truly understanding how to price your items when using FBA is critical to achieving the optimum price position on the product detail page, not leaving money on the table and finally how to weigh the increased fees vs. self fulfillment.  Each of these components comes down to setting the best price for an FBA item.  If you’ve done your homework and set the price according to your goals then you will be in the best position for that next customer to come along and snatch up your copy.

Crunch Some Numbers

Each of us probably has different sales goals in mind when listing a copy of a book online.  Some of us look for a quick sale but may sacrifice a little to lower the price while some of us would rather wait for the right customer to come along and choose to price their book low but not the lowest.  There are a myriad of factors that go into picking the right price but really it can all boil down to the individual seller’s goals and how much risk they’re willing to take.  FBA is no exception.  FBA sellers need to take advantage of all the incentives Amazon gives us while still remaining cognizant of the increased fulfillment fees.  Amazon’s not going to do the grunt work for nothing!

There are a few points you need to keep in mind when setting a price goal for your books when selling via FBA.

1. Fully understand all incentives FBA provides to you AND the customer.
2. Know each and every fee for every book you send to Amazon down to the penny.
3. Decide how much financial risk you’re willing to make.

Amazon FBA’s Pricing Incentives

First, I believe the most important part of truly taking advantage of FBA is to first understand every incentive Amazon gives the seller and the buyer as well as applying this knowledge to your pricing structure.  What are these incentives that Amazon provides anyway?  Stick with me..I’ll make it easy on you so you don’t have to go digging through Amazon’s help sections.

The most important incentive to you, as a seller, is how Amazon sorts the prices when someone clicks on either the New or the Used sections of a particular book.  Instead of writing a few paragraphs I decided to put up a quick video to explain the sorting incentive.  Check out this video about Amazon FBA price sorting.  In that video, I touch on the other incentives to buyers which are Amazon Prime customers to get free shipping and the items are also available for free Super Saver Shipping which means any order over $25 will get free shipping.  Pretty cool, right?

What do these incentives translate to?  They translate to more sales for YOU!  When customers can get free shipping it’s a huge plus to them and add the sorting incentive which exposes your books at the very top of the heap simply by keeping your price less than $3.99 more than the lowest competitor is awesome!

FBA Fees

The second point you need to be aware of when setting a pricing goal is the fees.  Yuck!  Unfortunately, you’re going to have more expenses with FBA but if you’re able to understand them and factor them into your bottom line you’re golden.  What are the fees associated with a FBA transaction for us booksellers?

1. The usual Amazon fees (15% commission and $1.35 variable closing fee)
2. Pick/Pack at 50 cents.
3. Weight handling at 40 cents/lb
4. Storage fees at 45 cents/cubic foot Jan through Sept and 60 cents/cubic foot Oct through Dec
5. Inbound shipment cost depending on how close you are to the fulfillment center anywhere from 15 cents/lb to 50 cents/lb.
6. Boxes and any packaging material for shipment to Amazon cost variable.

To get an accurate representation on your profit potential always calculate all the costs associated with FBA prior to sending books their way.  You may get burned if you don’t.  Take a look at this screenshot showing my laziness when not paying attention to Amazon FBA fees.  I’ve used spreadsheets in the past to calculate the total fees but Amazon recently released a pretty useful calculator of their own called the Fulfillment by Amazon Revenue Calculator which does the trick as well.

Are You a Gamblin’ Man?

I’m not a big risk taker.  I’d do terrible in the stock market which is why I hesitated at first to use FBA.  The reason is solely because of the storage fee.  If your book doesn’t sell and sits on their shelf you’re getting charged every month.  This is exactly the reason why I loved every bookselling site besides eBay is because of no listing fee!  However, once I sat down to crunch some numbers the storage fee that Amazon charges is extremely small.  To put that fee into perspective I just checked my latest storage fee for the month and it was $40.28.  At that time, I had around 3,200 books in their warehouse.  Do you think you could find a monthly lease for rental space for over 3,200 books for $40?  I doubt it.  Don’t let the storage fee scare you because it truly is a small price to pay for FBA.

Numbers Crunched. Time to Rock n’ Roll! Megasellers Beware!

After you’ve crunched the numbers and felt out your level of “risk” tolerance it’s time to finally set your FBA price.  In this section I’m going to tell you my method and an alternative method I’ve heard about.  There is no right or wrong pricing method here.  This is simply a matter of your preference for quick sales or risking/slower sales but squeezing every ounce of money from an order.

My Personal FBA Pricing Strategy

Personally, I set prices to sell and to sell as quickly as possible.  Once you’re in the game for awhile you’ll soon realize to achieve big sales numbers with non-collectible books it all comes down to quantity.  This is what I concentrate on.  Here is a screenshot of my exact rules for pricing FBA listings.

You can see that it’s set pretty aggressively.  Notice the checkbox at the bottom called “Include shipping rates in competitive pricing logic”.  This is Monsoon’s way of saying “we know this is an FBA listing and we know how to play the $3.99 strategy referenced above”.  Most repricers will have a FBA function where they will automatically add $3.99 to your price because they know every FBA seller worth their salt will take advantage of the sorting incentive.

This strategy is working for me because since I’m able to source books so cheaply ( < 3 cents/book) this means I can remain competitive and profitable much longer than someone that has to pay much more for his inventory.  Another example of the beauty of thinking outside the box, people!  SIDE NOTE: Keep your eyes peeled for the exact source I use and dozens of other virtually unknown sources in an upcoming eBook via the email list.

Ignoring non-FBA Listings Completely

I’ve got a friend.  We’ll call him, George.  George has tried to convince me over many emails that I am leaving money on the table with my strategy.  He is a firm believer in ignoring non-FBA listings completely in his competitive pricing strategy and only acknowledging Amazon itself as a competitor.  This strategy has it’s definite advantages and according to George, he’s lost count on the number of times he’s sold books for over $10,15 or even $20 when the book could be considered a “penny book”.  The reason?  He’s taking like new books, ignoring everyone else and undercutting Amazon by a little bit.  I can see the reasoning and it’s very tempting to do.

Why are people buying books from George at such insane prices when they could get the book for much, much less?  Refer to my video about incentives.  He’s laser targeting Amazon Prime customers and customers taking advantage of the free Super Saver shipping.  Think about this for a second.  Let’s say you’ve paid $79 for your yearly subscription to Amazon Prime and you’ve gotten accustomed to the “right now” mentality.  Prime members always get free 2-day shipping.  Quick.  Fast.  Right now.  Me want!  If you were accustomed to getting your orders super-quick all the time for free would you want to hassle with a 3P seller shipping you a separate order via USPS media mail shipping?  Prime customers are willing to spend a little more to get it Amazon-quick.

Also, put yourself in the shoes of a customer that has $15 worth of stuff in his cart.  He’s eyeing a book that has 10 offers for a penny+$3.99 shipping but a FBA offer that’s $10 with FREE shipping AND fulfilled by the name that has seemingly sealed the “super quick and reliable” image in their brain; Amazon.  Sure, it’s $6 more but this customer would spend more than that on lunch tomorrow.  He thinks, “What the hell?  Let’s just get it here quickly and all in one order.”

Finally, most of these books are in like new condition.  Like new and new are pretty synonymous and I would bet a Prime customer wouldn’t care if a remainder mark were on a book or the book had a few minor scuffs.  If you use this method, pay close attention to condition.  You can try to compete with a $29.99 brand new copy from Amazon with your $28 good copy but I really don’t see someone throwing you a bone.

Tweak, Monitor.  Tweak, Monitor.  Bingo!

Once you have that pricing strategy setup don’t just let it sit there!  Times changes and so do sales.  Periodically check to see which books are selling, which books are sucking storage fees and try to pin down any trends that you see.  For example, if you’re noticing a number of books not pulling their Lose Weight Exercise and just relaxing on your dime, drop their price manually instead of waiting for the repricer to do it.  Storage fees aren’t that much but they will sneak up on you if you get lazy.  Stay active with your FBA listings!  You’ll find that it’s so easy you’ll just forget about your FBA listings once they leave you.  Don’t!  Pay attention and tweak to achieve maximum efficiency.

Fulfillment by Amazon has done a lot for my business and thousands of other businesses as well.  By taking the time and performing some due diligence with FBA prior to starting will do yourself a big favor.  Tally up all costs, book Lose Weight Exercises, time to process a shipment and other important metrics to determine what’s best for your business.  Most importantly, remember there is never a “right” price.  You can choose whatever price you’d like with FBA.  Just remember to be aware of your sales goals and consistently monitor your sales activity to ensure you’re meeting your own goals.

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Amazon FBA Pricing Strategies to Stick it to Penny Book Mega-Sellers [ 13:25 ] Play Now | Play in Popup | Download (182)

As an online bookseller, my ultimate goal is to make money and pricing books is a critical part of that. It’s not to indulge in learning all there is to know about books nor is it out of sheer bliss that I sell books online. If I didn’t get paid to sell books, you would never see me driving 4 hours to then load up 20,000 books, drive back 4 hours and then proceed to unload them all for 6+ hours (true story) thus never having to learn pricing books. Knowing that my end goal is to make as much money as possible selling books, one of the most important things you need to know is how to accurately learn the art of pricing books when you are listing. Knowing how to learn the art of pricing books will be a critical factor in your success in online bookselling.

I’m going to look at 2 different strategies you can use in pricing books to accurately set a price you want to sell online. In this post, I’m going to just concentrate on Amazon. All other marketplaces are similar but since Amazon is the most prevalent and is the one that I’m most familiar with much of the discussion is going to be based around Amazon. These 2 strategies all have their place and it is up to you to decide which one you want to employ or to even employ a combination of them. Each strategy is a valid way to sell books on Amazon. They will all make you money but the big difference is time vs. money.

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