How Much Does the Price Affect Rankings on Amazon?

It's no surprise that entrepreneurs are flocking to the Amazon marketplace, either to start their own online business or to expand the reach of their existing enterprise. Quarterly revenues have exploded over the last decade, from $9.52 billion in Q4 2009 to $87.44 billion in Q4 2019.* 

All either fledging or established online businesses have to do is secure a very slim share of their respective markets, and they can reap huge success. Better yet, if you make use of the Fulfilled by Amazon (FBA) infrastructure, there's very little work involved beyond ordering more stock and optimising your listings. 

But while optimising your listing may not seem like much work, what may seem like small insignificant alterations can have monumental impacts on the sales performance of your products. With 2.6 million other sellers on the platform, every minute alteration needs to be analysed and evaluated to ensure that your products stand out.*  

Price is one of the most apparent aspects that an Amazon seller has control over, but what effect does it have on your rankings specifically? Does it directly affect performance or is more of an indirect influencing factor? 

We're going to explain why the price is an important ranking factor and how it directly affects a myriad of other performance indicators that Amazon measures on your listings. But first, we need to take a look at Amazon's A10 algorithm, which decides the rank of each product.

The Move from Amazon's A9 to A10 Algorithm

The A9 algorithm was the last officially-announced ranking algorithm from Amazon. But there have been several updates released over the previous 18 months, with many calling those updates effectively a move to a new "A10" algorithm.


So what are those changes precisely?

The A9 algorithm was built on four pillars: sales performance history, text match relevancy, price, availability of stock. These four pillars were then supplemented with other less influential factors such as fulfilment method (FBA or self-fulfilled), reviews, images, advertising spend, and promotions.

However, subtle changes have been rolled out to broaden the scope of the ranking factors, culminating in today's version of the A9 (or "A10") algorithm. Currently, the factors that primarily decide the ranking of your product are as follows (with the most significant weighting given to those listed first and proceeding as a sliding scale thereafter):

  • 180-day sales
  • Conversion rates
  • Organic sales
  • Off-site sales
  • Click-through rates (CTR)
  • Internal Sales
  • Pay-per-click sales (PPC)
  • Impressions
  • Seller authority

As you can see, there's now a much more extensive range of inputs that go toward deciding where your products end up within Amazon search results. Interestingly, there's been a shift away from the importance of sales driven by PPC, and off-site sales have dramatically increased in importance.

Notice what isn't listed here despite featuring as a critical pillar of A9? Price.

Doesn't that mean that the price you set isn't that imperative to the success of your Amazon business anymore? No. In fact, the price you set has taken an even more essential role.


Why Setting the Right Price is So Crucial

While the price might not be explicitly named in the changes rolled out to the A9 algorithm, it takes on more significance because it directly affects many of the principal ranking factors. The ranking factors with the most weighting (180-day sales, conversion rates, organic sales) can all be increased by making changes to your pricing strategy.

By lowering your price to the point where you beat out competitors, you can steal a march on them in the rankings by boosting recent sales, conversion rates, and the number of sales secured without the help of advertising.

But while this move seems, in practice, to be a simple one, it's anything but the case. Lowering pricing to undercut your competitors is easy to accomplish, but go too low, and you'll end up sabotaging your rankings. How? Well, it's perhaps best to use a fictitious example to explain why this is the case.

Let's say that you're selling a product at an arbitrary price of £100, and leading competitors who top the rankings are selling the same product at £79.99. If you slash your price to £29.99 in an attempt to drive up sales, you're actually less likely to receive any sales.

Think about it, would you buy a product that a marketplace full of sellers sets at around £80 for £29.99? Would trust that the product is genuine? The answer is no. While you may get the odd buyer who is willing to risk it, the more likely outcome is that your sales will evaporate, causing more destruction than progress.

Therefore, you've got to strike a delicate balance. Perhaps £69.99 might be a better alternative in this scenario; not so inexpensive that it can't be trusted but cheap enough to drive up organic sales and conversions, increasing your ranking position thereafter.


What About Additional Ranking Factors?

You will already be well aware that successful performance on Amazon is a multi-faceted equation. Choosing the right keywords, investing in quality imagery (and video), increasing seller authority through reviews, and spending time off Amazon promoting your products are all significant contributing factors that shouldn't be ignored.

I stated at the top of this piece that Amazon FBA businesses have it relatively easy, merely replenishing stock as and when is needed, as well as making the odd tweak to product listings. But getting to that point is a real battle.

To have a business that runs pretty much on auto-pilot, hours need to be spent on optimising everything about a listing. Sales, pricing, keywords, images, reviews, and conversions are all metrics you need to test and fine-tune continually until you hit the sales volumes required to dominate your product's niche.      

I think we can both agree that a business that sells 200 items a day looks very different from one that sells just two per day, which is why you need to invest in professional help to reach the heady heights of leading Amazon FBA sellers.


How the London Bridge Project Can Help to Deliver Success

The London Bridge Project (LBP) is a leading consultancy and management company that provides both amazon consulting services and amazon sales support for businesses looking to grow exponentially within the biggest marketplace in the world. We offer a complete end-to-end service for Amazon based-businesses, which includes providing valuable insights into Amazon sales data and a pipeline of under-explored opportunities within your niche.

If you would like to learn more about how the London Bridge Project can help your online business, make sure to contact a member of our team today to discuss your requirements.