Raising your prices on Amazon without losing the sale

Your supplier has put prices up, freight costs more, and the margin on your best product is thinner every month. The price has to rise. Most advice on how to do it comes from seller-forum threads and US repricer blogs, and it skips the two things that decide whether the rise works: the sum, and Amazon’s own price checks.

A price rise can fail in two ways. Shoppers can buy less, so you sell fewer units at a better margin and end up with less profit. Or Amazon can stop featuring your offer, so the Add to Basket button goes to someone else or disappears. This guide deals with both, in the order we would deal with them.

Do the sum before you touch the price

A price rise wins if the extra profit on every unit you still sell is worth more than the profit on the units you lose. That gives a single number to work out before you change anything: the largest fall in units the new price can absorb.

“Old unit profit” means what you would keep if you did not raise the price, after the cost increase. That is the real alternative. Comparing against last year’s margin makes the rise look worse than it is: in the example below it gives 5.7% instead of 21.6%. If your costs haven’t changed, the two are the same.

Worked example (invented figures)

A product sells at £30.00 on Amazon.co.uk and sells 1,000 units a month. The landed product cost has just gone up from £8.00 to £9.50. The FBA fee is an illustrative all-in £3.50 a unit, including surcharges and the digital services fee.

Amazon’s fees grow with the price. The referral fee is charged on the total the buyer pays: Amazon’s methodology page counts “all shipping and handling, gift wrap and other charges, and any taxes and customs duties"⁵. Amazon says most referral fees are between 8% and 15%; in many categories, and for everything not listed elsewhere, the rate is 15% with a £0.25 minimum⁴. On UK sales Amazon adds “a 2% digital services fee” on “Selling on Amazon and FBA fees"⁶, which makes 15% cost 15.3% in practice. VAT is 20% at the standard rate⁸, so one-sixth of a VAT-inclusive price is VAT.

Check the last column: £33.00 − £5.50 − £5.05 − £3.50 − £9.50 = £9.45.

Now the sum. Maximum unit drop = (£9.45 − £7.41) ÷ £9.45 = £2.04 ÷ £9.45 = 21.6%.

• Absorb the cost: 1,000 × £7.41 = £7,410 a month.
• Raise to £33.00 and sell 900 units: 900 × £9.45 = £8,505. The rise wins by £1,095.
• Raise to £33.00 and sell 784 units: 784 × £9.45 = £7,408.80. The rise now loses, by £1.20.

So a 10% rise can lose up to about 215 of the 1,000 units and still come out ahead. Lose more than that and you would have done better leaving the price alone.

A bigger rise buys more room, but not for free

The same sum for three sizes of rise, all against absorbing the cost at £7.41 a unit:

At £31.50, VAT is £5.25 and fees are £4.82; at £34.50, VAT is £5.75 and fees are £5.28. Every row uses the same FBA fee and product cost.

The bigger rise has more headroom on paper. It is also more likely to fall foul of Amazon’s price checks below, and more likely to push shoppers to a cheaper product next to yours in search.

Each extra £1 keeps only about 68p

Notice that the cost went up by £1.50, but the price needs to rise by more than that to stand still. Of every extra £1 on the price, about 16.7p is VAT and 15.3p is Amazon’s referral and digital services fee, so you keep about 68p. To recover a £1.50 cost increase in full you need about £1.50 ÷ 0.68 = £2.20 on the shelf price, not £1.50. Adding the cost increase to the price, the usual shortcut, comes up short.

Two things move the sum, so put them in:

• Advertising. If your ad spend is a fixed amount each month, the break-even above does not change. If you count ad cost per unit, remember that when conversion falls, each sale costs more in clicks. Our sales-down guide shows the same budget selling a sixth fewer units when conversion drops from 6% to 5%. Our break-even ACoS guide shows how to put ad cost into the margin.
• Fee bands. Some categories change referral rate at a price threshold. Amazon’s UK schedule shows, for example, Home Products at 8% at or up to £20 and 15% above £20⁴. A rise that crosses a band can take most of its own gain in fees. Our guide to Amazon’s UK fees has the thresholds.

You can run your own numbers through the Profit X-Ray, which takes your margin before advertising and shows how much ad spend it can carry.

Raise your own website and other retailers first

The second way a rise fails has nothing to do with shoppers. Amazon decides which offer gets the Add to Basket button, and it checks your price against prices outside Amazon.

Amazon’s Pricing Health page lists offers that are “currently ineligible to become the Featured Offer” because “they aren’t priced competitively compared with other retailers outside of Amazon (the competitive external price) or they’re priced significantly higher than recent prices observed on Amazon or elsewhere"¹.

Amazon defines the competitive price threshold it uses as “the lowest price plus delivery for an item or items that customers may consider to be equivalent, recently found at another reputable retailer outside the Amazon store"¹. Amazon says it may look at both online and physical store prices, and that it does not “reveal the names of the retailers that we check"¹. It may also leave out delivery charges for a retailer where customers could get the item without paying them, such as one that “consistently offers free shipping"¹.

So the order matters:

1. Your own website first. If your site still sells at the old price, your Amazon offer is now priced above it.
2. Retail and wholesale customers next. Tell stockists the new recommended price and when it starts. In the UK you can recommend a resale price but not impose one; our Featured Offer guide explains what the CMA says about that.
3. Amazon last, once the cheaper prices elsewhere have had time to change.

Business buyers are a separate case. Amazon says that business customers on Amazon.co.uk “tend to base their buying decisions on VAT-exclusive prices”, and compares VAT-exclusive prices for them where available². If you sell to Amazon Business customers, check your business prices rise in line too.

Check Pricing Health and the reference prices

Before the change, open Pricing Health in Seller Central and look at the products you plan to raise. Then look at the prices Amazon will compare you with. Amazon says reference prices can include¹:

• the Featured Offer price
• the 60-day average selling price
• the highest 14-day price (shipped and sold by Amazon)
• the product’s list price
• the price derived from the per-unit Featured Offer price for a smaller bundle of the same product
• the was price
• the 60-day average offer price

Two of these matter most for a planned rise. The average selling price is “calculated based on the prices at which customers have bought in the Amazon store in the past 60 days, weighted by units sold”, and Amazon adds that promotional prices such as Best Deals and Lightning Deals are excluded but “sale prices are included"¹. And Amazon does not say how much higher than recent prices counts as “significantly higher”. No public page gives a percentage. That is the reason to rise in steps.

Be careful with the list price, too. Amazon’s reference price policy says a recommended retail price “must represent the price applied by you or other retailers or sellers outside of short-term discounts"⁷. Raising the RRP first so that the new price looks like a saving, a tactic some US blogs suggest, can show shoppers a saving that isn’t real. The was price is set by Amazon from “historic prices paid for the product by customers on an Amazon store"⁷, not by you.

If an offer is flagged after you have already raised prices elsewhere, Amazon now has a self-service dispute for an outdated competitive price, and says: “You could receive automated resolution in as little as 30 minutes"¹. The route is in the Seller Central Help menu under Get help and resources.

Rise in steps, with a stop rule set in advance

Amazon publishes no safe step size, so what follows is our practice, not Amazon’s rule. We would rather take three small steps that each pass than one large step that loses the Featured Offer for a fortnight.

Pick the two numbers to watch. Both are in Business Reports, by ASIN:

• Unit session percentage, which Amazon defines as “the number of units purchased relative to the number of customers who viewed the products”, units divided by sessions³. This is conversion.
• Featured Offer percentage, “the percentage of page views where the Featured Offer (the ‘Add to shopping basket’ link) appeared on the page for customers to add your product to their basket"³. If this falls, Amazon has stopped featuring you on some page views, whatever shoppers think of the price.

Turn the break-even into a floor for conversion. If traffic holds steady, the largest fall in units is also the largest fall in unit session percentage. In the worked example, at 10% unit session percentage:

Those floors are the break-even. In practice we set the stop line well above them, because a fall to the floor means you did all that work for no extra profit.

Hold each step long enough to read. In our practice, at least two full weeks, compared with the same days of the week before the change, with no deal, voucher or big change in ad budget in either period. Amazon’s Manage Your Experiments tool lists “six types of content available for experimentation”: images, titles, bullet points, description, A+ Content and Brand Story⁹. Price is not one of them, so a clean before-and-after is the best you have. Our experiments guide explains how to set one up against a similar product you did not change.

The stop rule. Write it down before step one. In our practice it looks like this: stop and roll back the last step if unit session percentage falls below the stop line, or if Featured Offer percentage falls by more than 10 points, or if Pricing Health flags the offer. On a brand’s own products we expect Featured Offer percentage close to 100%.

Don’t push ads to hold the line. It is tempting to raise ad spend so that sales hold after a rise. If conversion has fallen, each extra click buys fewer sales than before, and the sales you hold cost more.

Alternatives to a straight rise

A straight rise is not the only way to recover a cost increase. Each of these has its own catch on Amazon.

• End a promotion instead. If a product runs a standing voucher or sale price, ending it raises what shoppers pay without changing the list price. Amazon notes that promotions, “such as vouchers”, can improve your chance of being featured², so ending one can also lower it. Sale prices count in the 60-day average selling price¹, so a long-running sale has been setting your reference price.
• Multipacks. A two- or three-pack can carry a better margin per order because FBA and handling are paid once. But Amazon compares packs per unit: one reference price is “the price per unit of the Featured Offer from a smaller bundle of the same product, multiplied by the number of units in your listing"¹. A multipack priced above the single-unit price times the number of units can be flagged.
• A new size. A genuinely different size gets its own price, and can let shoppers who care about price stay on the smaller one. It is not a way round the checks: Amazon may compare per-unit prices across pack sizes, and may treat products with “near-identical attributes” under a different brand name as equivalent¹.
• Cut cost instead of raising price. Packaging that drops a size tier, or a price that stays under a fee threshold, can recover part of the increase with no change for shoppers. Our FBA fees guide covers the tiers.
• Raise conversion first. If the listing is missing what shoppers need to choose, a better listing can hold conversion through a rise that would otherwise lose it. The listing checker is a quick first look.

Write the plan on one page

Before any price changes, the plan for each product fits in one table.

If you would like a second pair of eyes on the numbers before you move, a Profit Audit starts with exactly this: margin per product after every fee, and which prices have room to rise.