SwiftStart launched Fomin during the height of the pandemic. The brand is now expanding its product lines after tripling revenue.
If you are looking for ways to increase your profitability on Amazon, then increasing the average selling price (ASP) of products may be one way.
The ASP is simply defined as "the total revenue divided by number sold." It can help improve overall profit margins and make sure that every sale brings in more money than before!
The balance between decreasing costs and increasing revenue can be tricky, but luckily there are ways for brands to make it work. If a company wants to increase its ASP without raising prices on existing products, it can do so by decreasing costs for sourcing and selling products.
Hard to believe? Let’s look at the 5 proven strategies below:
You can use these strategies to maximize your profit margins. Let's begin with the first one.
Launching a premium product is an excellent way for established brands to expand their customer base in the niche market and make more money. These high-end versions of top-selling items are typically sold at higher prices than regular ones.
It also complements your current inventory while also attracting new buyers who want something different from what you offer now.
A brand’s success is dependent upon having a strong value proposition that appeals so much to customers. And that’s the reason customers are ready to spend a lot more than what they would on other brands’ products.
Undoubtedly, when a company has an amazing value proposition, they are more likely to succeed in the long run.
Toothbrush heads are an excellent example of a product with premium features. Some brands have found creative ways to charge more for their products, such as by creating different varieties of colors. They create value propositions by introducing toothbrushes that can be tailored towards buyers’ personal tastes.
If you're not ready for the Premium Route just yet, consider implementing larger pack sizes in your existing range.
Why stop your customers at a single box when you can have them in bulk? When selling consumer goods, it's all about packaging. Make sure your top-selling products get larger packs of inventory so that customers can buy in bulk and more units can be sold.
For example, if your top-selling product is a 200ml shampoo bottle, you could introduce a 400ml shampoo bottle or even a bigger quantity.
Introducing larger pack sizes can help you make more money. The average price of your portfolio goes up while variable costs go down, thanks to economies of scale!
There's a reason why Amazon has such large pack sizes on their product catalog. It’s because people are shopping for everything!
To increase your average selling price on Amazon, you can create value bundles. Your created bundle conflates two or more items that are sold at a discounted rate and otherwise sold separately at higher prices.
It will help customers purchase multiple products in one go instead of just buying each item individually which increases their total spending as well!
Value bundles are a great way to upsell new and existing customers on your site. You can sell complementary or refillable products to upsell new customers. With this strategy, you can provide more value in one purchase.
The business world is becoming more competitive day by day. As a result, brands need to differentiate themselves not only with what they produce but also how it's sold and where customers can find them easily.
This means using different strategies in order for businesses' offerings to stand out from those around them!
To be successful, premium bundles need a strong value proposition that customers will appreciate. They should anticipate what they're needed and serve them right away with no fuss.
There are several ways to increase your brand’s ASP on Amazon, and to your surprise it can be done without launching a new product, creating bundles, or offering larger pack sizes. Luckily, you can increase your brand’s Amazon ASP by making some changes to your current portfolio mix.
It’s a simple process that begins by identifying products with above-average selling prices in the portfolio. Then, marketing and sales efforts will be focused on these high ticket items that can bring additional revenue for a company.
Remove products from the Amazon marketplace. Yes! You’ve read correctly. Although this might seem like a loss at first glance, there are some seriously good benefits to removing your product. It is suitable in the situation if you have listings of low ASP items.
Amazon has become the everything shop, but you don’t have to take it literally because you never want to sell at a loss.
Amazon's flywheel concept is rooted in providing customers with a wide selection of products, which ultimately drives growth and reduces costs.
It’s always a worry when Amazon removes permanently unprofitable items from their portfolio. The company's systems will initially request funds to keep them active, but if these products continue losing money then they'll eventually get taken away and deleted forever!
So you should consider de-listing products under £10 if they don’t return you a healthy profit margin and aren't key to attracting new or existing customers.
If you don’t want to delete your listings, you can also include a bundle option for customers that would add value to their purchases.
The journey of growing your ASP can be difficult, but it gets easier with time. I hope the tips above have helped you find some good advice on how to get started!
The average selling price may be the easiest and most effective way for you to increase your margins on Amazon, but that's not all there is. There are many ways you can increase your profit margins which we will discuss in our upcoming blog posts.