/The Essential Guide to Min and Max Prices

The Essential Guide to Min and Max Prices
Feb 26, 2024 4 min read

The Essential Guide to Min and Max Prices

Dillon Carter
Dillon Carter
Co-Founder, COO at Aura

Want to know the secret to not losing money or missing out on higher sales?

It comes down to setting your minimum and maximum prices correctly. This is where many sellers get stuck when getting started with a repricing tool for the first time.

These aren't simple numbers—they're levers that increase or decrease your performance.

We're going to learn the importance of both a minimum and maximum prices and how to set them correctly in this post.

Why Min/Max Values Matter

Minimum prices act as a safety net. They ensure you never dip below a certain margin, regardless of any fluctuations. This floor protects you from the dreaded price tanking scenario—where prices drop so low, they wipe out any profit.

On the other hand, maximum prices serve as a profit amplifier. They are the upper bounds that allow a repricing software to increase your price without pushing you out of a competitive range. Max prices seem less important, but setting them correctly significantly increases performance.This is especially true when using an oscillation repricing strategy.

Now that we understand why each exists, let's talk about how to set them correctly.

The Pitfalls of Manually Setting Min/Max Prices

Manually setting these values might seem straightforward, but there are potential pitfalls. For minimum prices, manual adjustments can be time-consuming and prone to error. For example, updating the minimum prices on 10 listings seems fine, but what about 2,000? It's also easy to accidentally set a minimum price in a reduced profit range, causing you to lose money.

Maximum prices are even trickier. Set them too low, and you're leaving money on the table; too high, and your listings could become invisible to buyers. The variables of a listing can change second by second as well. Competitors join or drop off. Demand increases or decreases. You transition from Q3 to Q4, where prices can double if not triple overnight.

Keeping up with these changes is practically impossible.

Now, there is one method that works good enough for manually setting your max prices...

Start by considering what a reasonable max price a buyer would be willing to pay for the product—you can look at comparable products as well. Then, look at the current competition's pricing on the upper end. Is there a grouping of more than 2-3 sellers at that price point? Take a rough average of these values and use that as your max price.

Is it ideal? No, but it's better than guessing.

Manually setting your minimum and maximum prices is a less than ideal approach. Let me give you a better one.

Automating Min/Max Prices

This is where automation and AI come into play. By automating these values, you can ensure prices are always optimized for both protecting your downside, but also your upside.

Automated minimum prices are calculated based on your cost and profit goals. Profit goals could be ROI, Profit Margin, or Fixed Profit. This is easily done in your strategy settings but telling the software what minimum profit goal you want to achieve (20% ROI for example) and your costs.

Automated maximum prices, on the other hand, is where the real magic happens. The issue with max prices is that they cannot be calculated using your cost. In fact, it has less to do with your costs and more to do with the economics of the listing and how they change. With AI-models like Maven, max prices are dynamically set in real-time. It takes into account multiple factors like competitive offers, historical buy box prices, and market demand. This method allows the max price to increase, so your upside is never limited.

The great thing about this approach is its simplicity and effectiveness. You do less work and get better performance, even as the market changes rapidly. There's no more manually tweaking thousands of listings or monitoring your max prices. With models like Maven, your min/max settings are continuously optimized.

This is how you stay competitive, protected, and maximized for profitability.

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