Amazon Pricing Strategy: The Ultimate Guide to Dominating the Marketplace

In the hyper-competitive world of Amazon, pricing is much more than a mathematical calculation of profit margins. It is a dynamic lever that influences search visibility, determines Buy Box ownership, and shapes your brand’s perception. 

Whether you are a brand owner or a reseller, having a sophisticated Amazon pricing strategy is the difference between scaling a multi-million pound business and fading into the sea of search results.

As we navigate the complexities of the current marketplace, here is the master guide to building a data-driven pricing strategy based on industry best practices.

Why Pricing is the Engine of Amazon Success

On Amazon, price is a primary driver of the A9 Algorithm. A competitive price leads to higher conversion rates, which in turn boosts your organic ranking. Learn more about how to boost your ranking in our recent blog, click here.

The most critical reason to master your pricing is the Buy Box, as over 80% of Amazon sales happen through this “Add to Cart” button. 

However, if your price is not considered “competitive” by Amazon’s standards, you may lose the Buy Box, even if you are the only seller on the listing.

This happens because Amazon’s Marketplace Fair Pricing Policy empowers its algorithm to remove the “Add to Cart” button if it detects that your price is significantly higher, than recent historical trends. Or, if the same product is available at a lower price on competing websites like Walmart or eBay.

Core Amazon Pricing Models

According to leading experts from Amazon Seller Central, there are three foundational ways to manage your pricing:

1. Manual Pricing

This involves manually updating prices for each SKU. While it offers the most control and requires no extra software, it is impossible to scale once you have more than a handful of products. It also leaves you vulnerable to competitors who use automated tools to undercut you at any time. If you’d like to learn more about how to optimise SKU structure, read here.

2. Rule-Based Pricing

You set specific rules for your products (e.g., “Always stay $0.10 lower than the lowest FBA seller”). This is a step up from manual pricing, but it often triggers a “race to the bottom,” where sellers continually undercut each other until profit margins disappear.

3. Algorithmic (AI) Pricing

The most advanced method, used by top-tier sellers. Algorithmic re-pricers use AI to analyse dozens of variables – including competitor stock levels, shipping speed, and historical demand – to set the highest possible price that will still win the Buy Box. To learn more about how to optimise your listing since the introduction of AI, read our blog on Amazon COSMO here.

Strategic Pricing Tactics to Improve ROI

For Amazon success, effective sellers adapt pricing to product stage and market conditions rather than relying on one fixed model. 

By lowering introductory pricing, it can help new products build early momentum and reviews, with gradual increases as ranking strengthens. Conversely, differentiated or premium products can often support higher pricing when brand equity and content justify it.

Using psychological pricing tricks, such as ending prices in .99 or using anchoring by showing a product next to a much higher price, can create the perception of a better deal without significantly impacting your profit margin. 

This means that in highly competitive markets, strategies like increasing unit sales or bundling products can boost total revenue and the average customer spend. Additionally, bundling makes direct price comparison with competitors more difficult for shoppers.

Seasonality and lifecycle also matter, because product demand changes with the time of year and how long it’s been on the market. This means, you can usually ask for a higher price when people want it most or when it’s brand new, then you might lower it as more competitors show up.

Best Practices for Sustainable Pricing

Every pricing choice should be focused on making a profit. Brands need a clear view of all their costs – including shipping, Amazon’s selling fees, ad spending, and returns.

By keeping prices similar across all sales channels is also key, since big price differences can hurt sales. Setting clear limits (a minimum and a maximum price) helps protect brand profit and lowers your risk. Utilising special offers like coupons can be used to boost sales without actually changing your regular prices for good. To understand more about selling across multiple channels, take a look at our recent blog.

A careful approach to pricing will keep your products visible and your business profitable in the long run.

Conclusion

A winning Amazon pricing strategy is not static; it is an evolution. By combining the automation of algorithmic repricors with the psychological tactics of value-based pricing, you can maximise both your sales velocity and your bottom line. In 2025, the sellers who win aren’t necessarily those with the lowest prices, but those with the smartest ones.

Want to see your Amazon performance skyrocket?  Book a call with our team or email us at amazon@marketrocket.co.uk to take your brand to the next level.