Winning the Buy Box at a loss
Your repricer does what it is told. It follows competitors down to the minimum price you set, and it wins the Buy Box. The problem is that the minimum was set a year ago, when your supplier's price was lower, freight was cheaper and the FBA fee was different. Today, a sale at the floor loses money, and the repricer is making plenty of them.
For resellers the problem is sharper. With many ASINs from many suppliers, and wholesale prices that change with each order, the floors were set in bulk from a formula nobody has revisited.
Why floors go stale
A minimum price should be the lowest price at which a sale still makes the margin you require. That depends on things that change on their own schedule.
| Input to the floor | How often it changes |
|---|---|
| Supplier cost per unit | With each purchase order or price list |
| Freight and duty per unit | With each shipment |
| FBA fulfilment fee | When Amazon changes rates or remeasures |
| Referral fee | By category and price band |
| VAT treatment | Depends on your registration and marketplace |
| Your required margin | When your strategy changes |
Nobody recalculates all of that for every SKU each time one input moves, so floors drift below the real break-even without anyone noticing.
What stale floors cost
Every sale below your true minimum loses money, and a repricer can make those sales quickly. Worse, stale floors can drag the market price down for everyone on the listing, including you, making it harder to recover. The opposite problem exists too: floors set too high after costs fell leave you losing the Buy Box when you could have competed profitably.
The reseller version adds a stock problem. Units bought at a higher cost get sold at a floor set for a cheaper batch.
A simple example: a reseller buys a branded kitchen gadget from a wholesaler, sets the floor with a comfortable margin and turns on the repricer. Six months later the wholesaler raises its price, Amazon raises the FBA fee for that size tier and the courier charges more to deliver to the prep centre. None of these changes is large. Together they move the true break-even above the floor. Two other sellers join the listing and the repricer follows them down to the old floor, winning the Buy Box on every sale and losing a little each time. The settlement looks busy. The bank balance does not.
The floor calculator we build
- A cost table per SKU with supplier cost, freight, duty and any prep cost, taken from purchase orders or your landed cost records, with the date each cost applies.
- Current Amazon fees per SKU read through the Selling Partner API fee estimates, including the referral fee at the price in question.
- Your margin rules: a required margin by product group, brand or supplier, set by you and editable.
- A floor calculated per SKU and marketplace from those inputs, with VAT handled the way your accountant tells us to handle it.
- A comparison against the floor currently set in your repricer or listing, and a list of SKUs where the floor is below break-even or much higher than needed.
- Approved changes pushed to your repricer through its API or to the listing's minimum price in Seller Central, with every change logged.
Where the cost of stock on hand differs between batches, the calculator can use the cost of the batch actually being sold, if your records identify it, rather than an average.
What pricing looks like afterwards
Floors stop being a one-off job. When a new purchase order arrives at a higher price, the affected SKUs are flagged and their floors updated after approval. When Amazon changes a fee, the whole catalogue is checked the same day.
The repricer keeps doing its job, competing for the Buy Box, but now within limits that reflect today's costs. You can also see, for each SKU, how close current prices are to the floor, which tells you where the competition is tightest.
For resellers, the same cost table helps with buying. A supplier's new price list can be run through the calculator to see which products still make your margin at current Amazon prices.
Could your floors be out of date?
- Minimum prices were set once and never recalculated.
- Supplier prices or freight have changed since floors were set.
- You have found sales below cost in your settlement data.
- Floors are set by a single percentage across the whole catalogue.
- Nobody can say what each SKU's true break-even price is.