The step-by-step online arbitrage system called “pricing hacking”: How to find underpriced & mispriced books on Amazon, buy them, and resell them back on Amazon for a profit.
What is “price hacking”?
Price Hacking represents a largely untapped way to profit on Amazon.
At any given moment on Amazon, there are hundreds of thousands of books priced well below their true market value. Either they are accidentally mispriced, or priced low deliberately,
Each one of these underpriced books presents an opportunity to profit: To buy the books at their current (low) price, then resell back on Amazon (or elsewhere) for the higher “true value” price.
The only questions we have to answer are:
- How do we define what an “underpriced” book is?
- How do you know what a book’s “real” value is?
- How do we streamline the process of finding these underpriced books?
I’m going to answer every one of these questions in this (long) article.
What we’re going to cover in this extensive training
- What is price hacking?
- Why do price discrepancies happen?
- How many underpriced books are there? (specific numbers)
- Step-by-step: How to spot books 50% below their average price.
- The 50% Rule, & the Profits of Price Hacking, and how far below market value should a book be before you buy it?
- Automating the process
- Live footage: Price Hacking in action.
Understanding the power of Amazon “pricing inefficiencies”
Back in 2015, I started talking about a system I was quietly perfecting in the shadows that I called “online book arbitrage.” It relied on finding books with a significant gap between the Merchant Fulfilled price and the FBA price, then buying at the MF price and reselling at the FBA price for a profit.
This is one example of a “pricing inefficiency.” Others include price differences between sites (buying on eBay and reselling on Amazon, or vice-versa), and price differences between mediums (library sale vs Amazon).
These are just a couple types of pricing inefficiencies among many. These are profit opportunities that are right under our nose by the hundreds of thousands (I’ll give you exact numbers in a minute), but we lack the ability to detect them in a systematic way.
There are hundreds of millions of price fluctuations on Amazon daily
Prices are constantly going up and down on Amazon at an insane rate. Imagine a hive of bees buzzing. That’s the energy of pricing changes on Amazon, with thousands of price changes per second.
And among all that noise, some very strange things happen.
Example of a real underpriced book I found on Amazon
Spoiler alert: Here’s an example of a book I found that I’m showcasing in a live “price hacking” demonstration” at the end:
In the video at the end, I’ll show you how I found this exact book. For now, take a look at those numbers.
The six month average price for this book is $162. This is revealed in Keepa. And I found this book when the current price was $42. That is almost one fourth of it’s average price.
I think we can agree the six month average is going to be basically represent an item’s true market value, right? Or close to it. The second lowest price in the same condition is $159, and the current FBA price is $176 as of the time I found this book.
So let’s recap the numbers again. I’m paying 42. If you just simply bought the $42 offer and relisted at the second lowest merchant fulfilled offer (which would then be the lowest because you bought out the lowest), you would relist this same book at $159. Or as an FBA seller, you can relist at $176. This would bring your profits to $91 or $99, respectively.
What’s important to understand here is you are still making money whether you relisted the book, Merchant Fulfilled, or FBA.
These opportunities are on Amazon right now by the hundreds of thousands.
The definition of “price hacking”
“Buying mispriced & underpriced books, and reselling at their true market value: either merchant fulfilled -or- FBA.”
That’s it.
Three reasons underpriced & mispriced books exist
These opportunities aren’t random. Here are the three reasons they happen:
Reason #1: Repricing tools gone wild.
“User error”: People not understanding how repricers work, dropping their prices accidentally.
This happens all the time.
Reason #2: Sellers having a “fire sale”
Most Amazon sellers are not business people. Sellers have irrational fire sales all the time.
Reason #3: Sellers who have no idea how to price books
Again: Most Amazon sellers are not business people.
New sellers have “low pricing self esteem.”
How do I know? I did this.
What we know from all this pricing chaos
There a hundreds of thousands of mispriced or underpriced books on Amazon at any moment.
But how many? I have real, specific numbers…
But first: let’s define what we mean by “underpriced,” and how we determine a book’s “real” value.
What is the “real” value of a book?
There are countless ways one could calculate how much a book is “worth.” But we’re going to keep this simple.
For the purpose of this training, I’m going to define the “true market value” of any book is it’s 12-month average merchant fulfilled price.
This gives a slightly conservative (because we’re not considering FBA prices) but very realistic measure of a book’s value.
How do we define an “underpriced” book?
Now that we’ve established how to value a book, how do we know a book is underpriced enough to be profitable?
I’m also going to keep this simple: We will consider any book priced 50% or more below it’s 12-month average price to be a profitable book.
This is a book we can safely purchase and resell for a profit. Very simple.
How many underpriced books are there on Amazon right now?
This is some exclusive info.
The big lingering question now becomes : What is the actual opportunity? How frequently are books underpriced or mispriced? What’s the potential for “price hacking”?
When I first began exploring this tactic, I was running an online book arbitrage tool that gave me access to a ton of data. While the tool I was running did not have anything to do with finding these types of underpriced books, we did store average prices.
So one day I asked our developer to write a program that would comb our entire database and crunch numbers on the total number of books in our database that were priced 50% below their 12 month average. In other words, books that are seriously underpriced.
He got back to me quickly wiht an exact number. Ready?
331,093
At the moment he crunched the numbers, there were exactly 331,093 books on Amazon priced below their 12-month average.
Let’s get more specific…
Let’s say you were just randomly skimming Amazon. How often would you stumble upon a book like this? How many pages would you have to comb through?
There are around 35 million books on Amazon. Depending on how you search, each page of search results on Amazon will usually have 20 results.
That’s one severely underpriced book every 5.5 pages.
The only question now is: How do we find them?
How to find underpriced books on Amazon: Step by step
This isn’t one of those “full automated push-button” systems. This isn’t easy. And it can be tedious. But if you apply this formula diligently and consistently, you can expect to find one profitable book for every 110 you review.
Ready?
Step #1: Install Keepa
Hopefulyl you already have Keepa installed.
Step #2: Go to Keepa’s “settings” tab and set your “chart appearance”
Update your settings in the following way:
Graphs to show: Set to “Used.”
Range: Set to “3 months.”
Filter extreme values: Set to “no.”
Step #3: Enable Keepa’s “hover graphs”
This is under “add on settings.” Set to “yes.”
Step #4: Set the Keepa “hover graph” appearance
- Check box for “used.”
- Choose 180 days. You can choose 365, but I prefer 180 days because the pricing graphs are less bunched up and easier to read in the 180 day graphs.
Now you can instantly see a book’s price history by hovering over it in the search results. This allows you to see the current price side-by-side with the historic prices. We are wll on our way.
Recap: What did we just accomplish?
- Embedded price history charts on every Amazon page.
- Enable displaying “extreme” values.
- Enabled “hover” graphs, increasing our search speed 10x.
- We put the current prices side-by-side with the historical prices everywhere on Amazon.
Essentially we just gave ourselves X-ray goggles to see underpriced books anywhere on Amazon.
Taking this further: Keepa’s “price drop” email alerts
Before we get to the step-by-step and live demonstration, there’s one more feature you should be aware of: Keepa’s “Track Product” feature. This lets you set up price drop email alerts. Anytime a price drops, you get an email (or desktop alert).
Two ways you can apply this to price hacking:
- Set up email alerts for everything, randomly.
- Set up email alerts for anything that is currently below average (but not enough to buy yet)
If this sounds useful (and it is, if you want to start doing this seriously), here are the steps:
- Step One: Click over to the product page for any book
- Step Two: scroll down to the Keepa interface and click the “Track Product” tab
- Step Three: Click inside the “used” or “new” field and set to 50% the 180 day average price.
Price Hacking: Step-by-step
Here are the exact steps upfront, followed by going into each in much greater detail:
- Go to Books category.
- Do a search (anything – doesn’t matter).
- Hover over every book, compare current price to average.
- Optional: Set price alert for anything that looks promising.
- Confirm sales rank.
- Confirm sellability of underpriced offer.
- Buy book, relist at average price, repeat.
- Optional: Change chart settings, do same search for New condition
Step #1: Go to the Books category on Amazon.
Step #2: Do a keyword search.
The word you choose really doesn’t matter. You’re just trying to get a long list of results that aren’t the typical bestsellers.
Ste #3: Hover over every book.
This will let you see the Keepa price history chart. To the right of the chart, you can see the current lowest price on Amazon at that moment. And at a glance, you can see in the Keepa price history graph what it’s general average price is.
What you’re looking for are dramatic drops in the graph on the far right, indicating a highly unusual and severe price drop.
We are going to scrutinize the exact numbers later. In this step, we’re just trying to size things up at a glance. So you compare the current price (which is right there on the page) to the average price (as generally reflected in the Keepa chart).
Step #4 (optional): Set a price alert.
We covered this above.
Step #5: Check the Amazon “best seller rank.”
You want to confirm this title is selling often enough to be within your comfort zone.
Step #6: Confirm the underpriced offer is sellable.
Is it water damaged? International edition? Etc. Do some quick due diligence.
Step #7: Divide what you want to sell it for.
Ask these questions to correctly price the underpriced offer:
- What is the pricing stability of the book? If the price is stable and not trending downard dramatically, plan to price close to 12 month average price (or higher if you’re selling FBA).
- Is it a “lone wolf” offer? These are rare, but the best opportunities are when there is only one offer, and it’s underpriced. Then you can relist at any price you want.
- Have other sellers chased the offer down? Sometimes there are multiple underprice offers, because one seller dropped their price to unreasonable levels, and other sellers chased their price down. This can present more opportunities to profit.
- Can you buy out your competition and “own” the listing?
Answering these questions let you determine your expected selling price.
Your pricing options are:
- Price at the 12-month or 6-month average price.
- Price just below the 2nd lowest current price (this will be the lowest once you buy up the lowball offer).
- Price match the lowest FBA price (for FBA sellers)
Step #9: Buy and relist on Amazon.
Of course, you can choose to sell either Fulfilled by Merchant, or Fulfilled By Amazon.
What’s great about this is that you’re going to profit either way. The fact that we are seeking out books that are priced more than 50% below their historical MF price means that you will profit selling either MF or FBA.
What You Can Expect With “Price Hacking”
If you apply these steps consistently, here’s what you can expect:
- One dramatically underpriced books (50% or more) every 5.5 pages.
- A steady stream of profitable books coming in via email.
Price Hacking: by the numbers
Let’s take a quick example of how the profits play out in a real world example.
- Cost of book: $25.
- 12-month average price: $50.
- Approximate net profit, reselling at $50 Merchant Fulfilled: $15.
Lets assume that same MF book has its lowest FBA price of $67 (a normal “price bump” for FBA listings). Here’s how that math works:
- Cost of book: $25.
- 12-month average price: $50.
- Lowest FBA price: $67
- Approximate net profit, reselling at $67 FBA: $24
Why the “50% Rule” is bulletproof insurance
Purchasing books priced 50% below their true market value (aka their average price) is the best insurance against ever losing money on a book.
You won’t lose money selling a book like this at either Merchant Fufilled OR FBA.
The reason is simple: Cutting your costs by 50%, increases your margins by 50%.
Why 50%? Why not 45%? Or 56%? It’s true the “50%” number is partially arbitrary (it’s just an easy number to remember). But it’s also practical: 50% is roughly the number where you start making decent money on any Merchant Fulfilled book (and if you’re selling FBA – the rest is gravy).
Another point for FBA sellers: You know you won’t lose money on something FBA when you know you won’t lose money selling even at the “merchant fulfilled” price.
The makes “50%” the ultimate insurance.
Now what you’ve probably been waiting for: A live “price hacking” demonstration of finding five books priced more than 50% below their 12 month average – along with profit totals, and more. Le’ts get into it….
Live Pricing Hacking demonstration
Spoiler: In this video, you’re going to see me make $465 in expected profit in one session. Let’s go….
How much will I expect to make with these underpriced books?
Book #1: Star Wars
- Paid: $41
- MF Profit: $64.15
- FBA Profit: $101.56
Book #2: Principles of Economics
- Paid: $79.97
- MF Profit: $112.85
- FBA Profit: $107.92
Book #3: Pharmacology textbook
- Paid: $16.92
- MF Profit: N/A
- FBA Profit: $142.55
Book #4: Effective Writing
- Paid: $29.62
- MF Profit: $17.50
- FBA Profit: $48.29
Book #5: Management textbook
- Paid: $33.89
- MF Profit: $46.87 (if waited 2 weeks)
- FBA Profit: $68.85
Total: $466
Everything we covered
This was a long training. Let’s cover what we just covered:
- Why underpriced books happen
- The number of underpriced books on Amazon
- Exactly how to find underpriced & mispriced books
- A live demonstration of all this in action
And that covers the complete “price hacking” formula.
-Peter Valley
Bonus: Here is a full video rundown on this article in one 100-minute presentation.
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