Why You Shouldn’t Use Amazon’s “Automated Pricing”

A complete guide to Amazon’s “automated pricing” repricer, and the 8 reasons you should never use it.

Video: Why Amazon’s Free Repricer is the WORST

A free automated repricing tool: What could be better?

There’s only two parts of your Amazon business that really matter: Sourcing and repricing. You can do almost everything else wrong, and as long as you get these two things right, you’ll still make money.

So Amazon giving us a free automated repricing tool sounds like a gift from the Gods. Certainly Amazon, with all its resources, has this technology mastered, and has built sellers the best repricing tool in the world, and at the best price (free).

It would almost impossible to mess up a free repricer built into your seller account. But somehow Amazon manged to create a disaster of a repricer, as I’ll cover in depth in this article.

Update: Amazon’s free repricer is so bad, I created my own. It’s called NeuroPrice. Try it free for 14 days here.

Is Amazon’s “Automate Pricing” Still the Worst Repricer?

Some years ago, I reviewed Amazon’s built-in repricer. My review was not good.

In fact my review was so bad, someone from Amazon’s “Automate Pricing” team reached out to me for my suggestions on how to make their repricer better:

Maybe I would have altered the course of history if I had accepted the offer of a 60 minute call, but I never responded.

I had already detailed the biggest seller complaints in my article. If Amazon cared, they could have just implemented my suggestions and sellers would be (mostly) happy. Every one of my suggestions was ignored.

Back then, Amazon’s repricer was brand new. So I thought, maybe it just needed time to improve. Surely in the years since, with the best developers and data at their disposal, Amazon’s repricer would have evoled.

Seven years later, I decided to check back in. Unfortunately, almost nothing has changed.

Let’s give a current tour and review of Amazon’s free repricer: Both how it works, and why using it is a huge (huge) mistake.

A tour of Amazon’s repricer: How it works

If you want to skip this in-depth tour and jump to the top 8 reasons you should never use it, I’ll make that easy for you: you can skip to that part here.

For the rest, here’s a step-by-step guide to Amazon’s free repricer: Every feature, what Amazon got wrong, and how I would make it better.

Step #1: Chose your “Rule Type”

This is the first page you come to, and usually the first step in any automated repricing tool: You have to decide which price you’re competing against.

Here’s what this page of settings looks like:

Amazon gives us four options here (I’m going to skip the “Business Prices” options). They are:

1. Competitive Featured Offer
2. Competitive Lowest Price
3. Competitive External Price
4. Sales Units

The definition for some of these isn’t intuitive, so I’m going to spend some time explaining each one…

Option #1: What is a Competitive Featured Offer rule?

“Featured Offer” is Amazon code for “compete against the Buy Box.”

Here’s what Amazon says about this option:

“The Competitive Featured Offer rule allows you to set your price to be below, match, or above the Featured Offer. Repricing stops when you are the Featured Offer. This rule type is useful when there are multiple sellers offering the same product.”

If you’re a Buy Box seller, who only competes with other sellers who have the Buy Box, then this is the setting you’ll choose.

Option #2: What is a Competitive Lowest Price rule?

This is where you’re telling Amazon “price against the lowest overall offer.”

Here’s what Amazon says:

“The Competitive Lowest Price rule allows you to set your price to be below, match, or above the lowest price. If you are the lowest priced offer, Automate Pricing will compare your price to the next lowest price. This rule type is useful when there are multiple sellers offering the same product.”

The secretive “Competitive External Price” is Amazon’s (in my opinion, sinister) attempt to keep all seller’s prices “competitive” with other websites (such as eBay and Wal Mart – though the only website I’ve seen Amazon explicitly admit to monitoring is eBay).

This is the same “competitive price” Amazon sets and uses as the basis of its notorious “high pricing errors.” It’s important to note Amazon does not publish the “competitive price” for any items, and leaves sellers to simply guess.

Here’s what Amazon says about “Competitive External Price”:

“The price of your SKU can match or be capped at the External Price. The external price is the lowest price for this item from other retailers and does not include prices from other Amazon sellers. Your offer may be ineligible for the buy box if Your Price + shipping is greater than the competitive price.”

Amazon’s agenda is to be known as the low-price option across the entire internet. The more sellers they can have using this rule, more Amazon wins. This option serves Amazon, not sellers.

Option #4: What is a rule based on sales units?

Spoiler: This is the only substantial change Amazon has made to it’s repricer since I first reviewed it 7 years ago.

This option allows you to update your price based on how many times it’s sold.
Here’s what Amazon says:

“You can decrease the price of your SKU based on the sales volume target that you select within a set time period. This rule type is useful when you want to change the price based on your sales volume, e.g. liquidation of excess inventory or demand-based repricing.”

There’s a lot wrong with this option, as I’ll explain shortly.

Step #2: Choose your Marketplace

Pretty simple. Check this box for any country you’re selling in.

Step #3: Set the rule parameters

This where you tell Amazon how to price in relation to the price set in Step #1.

Again, Amazon gives us four options:

1. “Lowest overall price” options
2. “Featured Price” (Aka Buy Box) option
3. “Competitive external price” options
4. “Rule based on sales units” options

Here is a screenshot of every one of these four pages, and the options Amazon gives you:

“Lowest overall price” options

Here are your options:

Making sense of these settings:

On the first page, you told Amazon which competing price to compare your price to. So on this page you’re telling Amazon two things:

1. How should it reprice your item in relation to that competing offer?
2. More specifically what to consider a “competing offer.”

At the top, you see an option to price higher than the competing offer, price lower, or match it. You’re also given the option of setting a dollar amount or a percentage.

For example, “Price $1 higher than the lowest offer.”

In the options below that, you’re defining more specifically what competing offers you want to price against.

“Only offers with the same or better sub-condition”: This is where you can tell Amazon: “If my item is in Very Good condition, ignore any competing Good or Acceptable condition offers.” This setting has a glaring gap in it’s logic, as I’ll get to in a second.

“Only offers with the same fulfillment method”: This is a good feature, allowing you only compare your price against either other Merchant Fulfilled or other FBA offers (whichever applies).

“Only sellers with a feedback rating within 5% of yours, or higher”: I’m aware that some sellers don’t consider any seller with a feedback score significantly below theirs to be a viable competitor. I personally don’t agree with this take, but regardless of where you fall on this debate, this setting also has a major logic flaw (more on that in a second).

“Only offers from 3rd party sellers”: This is basically saying, “Do you want to us to also look at Amazon’s offer when setting a price?” I’m totally confused by this one. I spent a lot of time trying to understand why any seller would not check this box. Not only is Amazon’s offer always competitive, it’s the most competitive of all offers. Super weird setting. (If you have an explanation for this, drop it in the comments).

Next up, a setting to compare price to sites off of Amazon. This is Amazon’s (in my opinion, creepy) “Competitive External Price.” Remember, if you arrived at this page, you’ve already told Amazon you are not using it’s “Competitive External Price” rule. So this appears to be another attempt to push sellers into pricing against sites off Amazon.

And then one more setting not worth explaining. And that’s it.

What’s wrong with these settings?

This is where Amazon’s repricer starts to show it’s flaws.

First, there’s no option to ignore competing offers in Acceptable condition. If you have a Very Good condition book for sale, the only way to not price against Acceptable condition offers is to also ignore Good condition. There are situations where I don’t consider an Acceptable condition offer competitive, but I always consider Good condition to be competitive with Very Good. Amazon doesn’t give us the option to exclude Acceptable only. Huge oversight.

Second, you are limited to ignoring competitors that have a feedback score more than 5% below yours. Ignoring competitors based on feedback score is not a repricing strategy I personally use, but if I did, I would need something better than this. For example, “ignore any seller with a score below 90%.” Forcing you to set an arbitrary “5% or more” filter is weird.

Third (and most importantly), pricing higher or lower doesn’t consider competing offers. How can you commit to pricing a percentage or dollar amount higher or lower, if it doesn’t consider the price of competitors?

For example: How can you tell Amazon’s repricer “price this offer 10% higher than the lowest FBA price,” if you don’t know what the 2nd lowest FBA price is? What if it’s only 5% higher than yours? And what if there are 5 other offers that are priced less than 10% above yours? Suddenly your offer is 6th in line.

And it can go just as badly in reverse, where you’re dropping the price far lower than what’s reasonable.

There’s no sane way to lower or raise prices without consider competing prices. It doesn’t make any sense.

There’s a lot more criticism to come, but let’s move on to the Buy Box option settings…

“Featured Price” (Aka Buy Box) options

Making sense of these settings:

This is pretty straightforward. Amazon gives you the option to compare your price to the Buy Box price, based on fulfillment channel (MF or FBA), and then that creepy “compare with prices that are off Amazon” option again.

What’s wrong with these settings?

Some big questions Amazon leaves unanswered here:

1. If you’re selling Used item, is Amazon comparing that to the Used Buy Box or the New Buy Box? (a few product categories do have Buy Box for used offers).
2. If you have a Used item listed in a category that has a Used Buy Box, is Amazon only comparing your price to the Used Buy Box price?
3. If you have a Used item in a category that only has a New Buy Box, what happens?

It’s an almost insane oversight to not address these questions. Since the stakes are so high, I can’t image how any seller with Used inventory could ever select this option.

“Competitive external price” options

I commented on the super-bizarre “External Competitor Price” above.

What’s wrong with these settings?

This is a ridiculous option for several reasons:

1. Amazon doesn’t publish the “competitor price” you’re being asked to price against. Amazon is asking you to commit to a price and not telling you what the price is. Totally crazy.
2. It’s a wild assumption that Amazon customers are looking at other sites. Some do, but there’s no way as a seller that I’m basing an entire repricing strategy around a few sellers who are checking a bunch of other sites. Especially as an FBA seller, where my customers are primarily Prime subscribers (and Prime is specific to Amazon). Not as crazy as the last one, but still crazy.

“Rule based on sales units” options

Yet another example of Amazon trying to coerce sellers into lowering our prices.

Amazon is giving us the option here to drop prices if we haven’t gotten a sale. You can drop prices every 7, 10, 14 or 30 days.

At first glance, this seems like a great alternative to repricing based on Sales Rank. In reality, it is anything but that…

What’s wrong with these settings?

First, there’s no option to raise prices. What if you have multiple units of an item, and it’s selling fast? That’s an opportunity to raise your price. There’s no option here for that.

Second, this is a poor substitute for a repricing rule based on Amazon Sales Rank. This option forces sellers into an aggressive “sell fast” stance. This is fundamentally at odds with getting most profit you can from your inventory. (Remember that Amazon’s agenda is for sellers to drop their prices and sell through their inventory fast).

This rule forces you to drop your price if something doesn’t sell, assuming that anything that doesn’t sell fast is priced too high. And what’s even more aggressive, it forces you to drop your price on anything that’s been in your inventory longer than 30 days (the max setting).

Amazon is basically saying: Consider any item in your inventory longer than 30 days to be improperly priced.

But there’s tons of inventory you shouldn’t expect to sell within 30 days, and there’s nothing wrong with that.

What’s worse, when it forces us to drop our price, it forces an absolute value that doesn’t consider competing offers. For example, something doesn’t sell in 10 days. Amazon drops the price 10%. But what if there is a competing offer that is 5% lower than your offer? Or 15%? For different reasons, dropping the price 10% wouldn’t make any sense.

You simply cannot commit to dropping a price unless you know the prices of other competing prices at that moment.

The entire “Sales Units” setting is another rule built around Amazon’s agenda (forcing prices down and increasing sell-through rate) that is totally at odds with you interest as a seller (getting the most amount of profit you can out of every unit of inventory).

Step #4: Choose what SKUs to reprice

Now that you’ve set one or more “Pricing Rules,” you advance to the next page where you manually add which inventory items go into which rule.

This is the step where you just have to throw up your hands and conclude Amazon is completely incompetent.

The only way to add SKUs to a pricing rule is to go through your inventory and add them one by one. (There is a “Manage SKUs via file upload” option, but you’re going that far, you may as well be paying for another automated repricing tool).

There’s a field to search by SKU, but you have to search by the exact SKU (not partial SKU). It would be so laughably simple to change a single line of code and allow a search by partial SKU, but Amazon won’t even do that.

It’s hard to believe how inefficient this step is, and it has nothing to do with Amazon having a different agenda than sellers. They are literally just incompetent and/or indifferent to making this simple for sellers.

You’re Done

You suffered through a massive amount of ambiguity, inefficiency, and sub-optimal settings to get here, but you’re done.

Before I distill every reason you should never use Amazon’s repricer into one concise list, let’s go over some basic features any repricer must have to be useful…

Five features every Amazon repricer must have

This list is not even close to exhaustive, but I picked five must-have features of any repricer that would not be obvious to anyone who isn’t a real Amazon seller. (Remember most Amazon repricing tools – including Amazon’s own – were not made by people who actually sell on Amazon).

#1: Ability to set rules based on Amazon sales rank: This is so basic it’s almost insulting to mention it. Fortunately, all Amazon repricing tools I’m aware of have this option – except Amazon’s.

#2: Ability to set rules based on SKU: Even within product categories, you’ll want to reprice different inventory different ways – based on attributes other than Amazon Sales Rank. This is possible through assigning certain “codes” to a SKU when listing, that allow you identify them in the repricing process. (This is a little advanced and its not a big deal if you’re not doing this).

#3: Ability to price against the lowest MF and FBA – with no blindspots: Amazon’s repricer actually does this. In fact, it’s the only repricer (currently) to not have the notorious “FBA blindspot” that hinders all other repricers. This is the only significant benefit to Amazon’s reprcer,

#4: Ability to price in relation to 2nd or 3rd lowest MF of FBA offer: This is so fundamental that it should be plainly obvious to the founders of any repricing tool. But only one repricer allows this (Amazon’s free repricer does not).

#5: Ability to set pricing rules based on category: You’re going to reprice certain types of inventory different than others. Again, super basic and super obvious (to everyone but Amazon).

This is merely a partial list of repricing tool features that would be obvious any Amazon seller – but are often ignored by companies who sell repricers.

The 8 reasons you should not use Amazon’s free repricer

Let’s recap everything we’ve covered in one concise list:

#1: Amazon’s repricer does not allow you to set pricing rules based on Sales Rank

It offers it’s extremely poor substitute called “Unit Sales.” This feature doesn’t allow you to raise prices (only lower). It forces you to drop the prices for anything that doesn’t sell – even if the item is a slower seller and the price is optimal for that item. It forces a price drop for anything that’s been in your inventory longer than 30 days. And when it does force a price drop, it doesn’t consider the prices of competing offers. A disaster all around.

#2: Amazon’s repricer does not allow you to set pricing rules based on product category

Amazon’s repricer does not allow separate rules by product category. I might want to have one rule for Books, and another for DVDs, and so on. The only option for this is to (painstakingly) add each product type to its respective rule manually, rather than have one global setting. Hard to believe Amazon allowed an oversight this big to last for this long.

#3: Amazon’s repricer does not allow you to search by partial SKU

Most of the terrible features of Amazon’s repricer can be explained by Amazon trying to push their “sell fast and cheap” agenda on sellers. This one is just pure incompetence. Want to add a text string to bring up every SKU with that text (and shorten the time it takes to complete this step by 90%? Sorry peasant. You have to do it one at a time. Amazon is laughing at us.

#4: The “Price Above” and “Price Below” options don’t consider competing offers

Amazon’s repricer flat-out will not consider any competing prices when raising or lowering your prices. That means if you tell Amazon to price your item $1 higher, and there are 10 sellers with a price between 1 cent and 99 cents higher, you’ll now be 11th in line. Good luck getting a sale.

#5: Amazon’s repricer only lets you compete against the lowest priced offer

Similar to above, with Amazon’s repricer there is no option to compete against the 2nd or 3rd (or any other) lowest offer. You can only price in relation to the lowest priced offer. This furthers Amazon’s agenda to force prices down, but is a disaster for sellers.

#6: Amazon repricer doesn’t let you exclude Acceptable condition offers

Do you have a Very Good condition book for sale, and don’t want to consider any book in Acceptable condition when setting a price? Amazon doesn’t allow it, unless you also rule out Good condition offers. Honestly, a ridiculous blindspot.

#7: The Buy Box options make no sense

In an oversight that could be clarified with a simple text change, Amazon doesn’t reveal whether it considers the Used Buy Box, forcing any seller of used products to abandon the Buy Box option completely. Another weird and incompetent oversight by Amazon.

#8: Amazon forces you to drop prices at every turn.

Across every Pricing Rule and option, from the “Unit Sales” rule to the “Competitive External Price” rule and beyond, Amazon coerces sellers into reprcing their inventory downward, not in the direction that is most competitive and allows for the greatest profits.

The ultimate repricing fantasy

Creating a good repricing tool shouldn’t be hard, but no one out there has gotten it right.

The ultimate repricing tool fantasy one that:

1. Allows pricing against the 2nd and 3rd lowest Merchant Fulfilled or FBA price (not just the lowest).
2. Has no FBA blindspots (no repricer can claim this right now).
3. Allows creating rules by Sales Rank, partial SKU, and Category.
4. Let’s you price against the New and Used Buy Box.
5. Reprice based on item condition.

There’s more, but these core features would be close to the ultimate repricing fantasy – which so far no tool has delivered.

Update: After publishing this, I went ahead and released my own Amazon repricer that does all these things. It’s called NeuroPrice. Try it free for 14 days.

Amazon’s Repricer makes “free” very expensive

Quite often, “free” is the most expensive option of all.

Turning over your inventory to Amazon’s automated repricer will:

1. Limit your repricing options.
2. Further Amazon’s agenda – not yours.

Amazon has had 7+ years to incorporate the interests of sellers into their repricer. At this point, it’s clear that it is just a trick to herd sellers into a trap – where your inventory prices are controlled by a set of rules that only cares about forcing your prices down at the expense of profits.

-Peter Valley

PS: I released an automated Amazon repricing tool that delivers everything Amazon’s repricer lacks. It’s for smaller sellers only, and it’s called NeuroPrice. Try it free here.

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