Amazon price drop: should you lower your eBay price, and by how much?

What should you do after an Amazon price drop?

An Amazon price drop on a product you price from lowers your cost, but it does not automatically mean your eBay price should fall by the same amount. The first step is to find out what kind of drop it is: a lasting change, a short deal, a different seller in the buy box, or a misread. The second is to decide how much of the saving to pass on, if any. The third, which sellers often forget, is to reprice back up when the cost returns.

Price drops feel less urgent than rises, and in one way they are: a missed drop costs you sales, not money on each order. But other sellers pricing from the same cost will see the drop too, and if they follow it down and you do not, your listing can sit above the market for as long as the drop lasts.

What kind of drop is it?

Confirm before you act

A large drop should be checked before it changes anything. Open the page at your usual delivery postcode and look at the buy box, the panel with the main Add to Basket button. Is it the same seller? Is there a delivery charge now? Is the offer new, not used? Is the price the one-time price, not a Subscribe and Save price? A second reading a few hours later settles most doubts. If the second reading disagrees with the first, keep your current price and look again later; acting on a single reading that cannot be repeated is how bad prices reach live listings. The guide to Amazon price errors and misreads lists the common false drops.

Should you pass a lasting drop on to your eBay price?

Usually yes, at least partly. If the drop is lasting, other sellers who price from the same product will see it, and many will reprice automatically. If your price stays high, you risk sitting above similar listings for weeks.

• Pass it all on when the product is competitive on price and many sellers list it. Your margin stays the same in percentage terms, and your listing stays visible.
• Pass part of it on when you have some room: a smaller cut keeps you competitive and adds a little to your profit.
• Keep it all when the listing already sells steadily and few competitors list the same item. The saving becomes extra profit, and you can watch whether sales change.

A cost-plus repricer passes drops on automatically, because it recalculates the price from the new cost. If you want to keep part of the saving, a slightly higher markup on that product does it without turning off the repricing.

How should you handle short deals?

Short deals are where drops cause losses, because the drop reverses without warning.

1. Decide in advance. For each product, choose whether you follow deals or ignore them.
2. If you follow, read often. A deal can end early when its allocation sells out, and the price jumps back.
3. Re-read after every sale. The next buyer should get a price based on the current cost.
4. Keep the floor. Your floor is calculated from the current cost, so it falls with the deal; make sure it rises again as soon as the cost does.
5. If you ignore deals, hold your price. A swing limit or a manual review stops a short deal pushing your price down automatically.

A hypothetical example

Example: suppose an electric toothbrush normally costs £45.00 and your eBay price is £61.36, from a 20% markup and a hypothetical 12% fee rate for the arithmetic. A lightning-style deal drops the cost to £35.00 for a day, and your repricer follows, setting £47.73. You sell five units during the deal, each at your planned margin on the deal cost. The deal ends at 6pm and the cost returns to £45.00, but your next reading is at midnight. Two sales in those six hours at £47.73 each return about £42.00 after the hypothetical fee, against a cost of £45.00, a loss of about £3 each. A re-read after each sale would have caught the change on the first of them.

Why do drops need reversing?

Every drop you follow is a promise to yourself to follow the cost back up. Sellers who reprice by hand often lower prices promptly, because they want the sales, and raise them slowly, because nothing prompts them to look. The result is a catalogue that drifts downwards over time, earning less on each sale than the formula intends.

• Reprice from every reading, in both directions. A rise should be handled as promptly as a drop.
• Note the end of deals. If you followed a deal, write down when it ends and check the price then.
• Check slow listings. A listing that has not sold since the drop may still be priced from the deal cost.

When should you not follow a drop at all?

• The drop is a different condition. A used or renewed offer is not the cost of a new listing.
• The drop comes with a slower delivery. A cheaper offer that cannot arrive in time does not help your buyers.
• The drop depends on membership or a coupon you will not get. Price from what you would actually pay.
• The drop is too good to be true. Very large drops are often errors; confirm before acting.

Whatever the price, the sourcing rule is the same. eBay allows dropshipping from a wholesale supplier, but listing an item and then buying it from another retailer or marketplace that ships directly to your buyer is not allowed under eBay's drop shipping policy. You stay responsible for delivery and your buyer's satisfaction.

How do you measure whether passing on a drop worked?

Lowering a price is an experiment, and it deserves a result. Before you change anything, note the listing's sales and views over the previous few weeks. After the change, watch the same figures over a similar period.

• Sales rose and profit rose: the drop was worth passing on. Keep the new price while the cost holds.
• Sales rose but total profit fell: you gave away more margin than the extra sales made back. Consider passing on only part of the drop.
• Sales did not change: price was not what held the listing back. Keep the saving as profit and look at the title, photos or delivery time instead.
• Views fell: something other than price changed, such as a new competitor or a seasonal dip. Look wider before drawing conclusions.

Judge by total profit over the period, not by the number of sales. A listing that sells twice as often at half the margin has not improved. Over a few rounds, you will learn which of your products respond to price and which do not, and you can set each one's markup to match. Products that respond strongly are good candidates for passing drops on in full; products that barely respond can keep more of each saving.

A price drop checklist

• Confirm the drop on the page: same seller, same condition, delivery charge included.
• Decide whether it is lasting, a deal, a coupon or an event price.
• Pass lasting drops on, fully or partly, depending on competition.
• Follow deals only if you will read often and re-read after each sale.
• Reprice back up as promptly as you reprice down.
• Keep a floor on every listing, recalculated from current costs, and judge each change by total profit.

Dropizon reprices from each live Amazon reading in both directions, with your minimum profit floor and swing limit applied to every push, and the Amazon price tracker for eBay page shows how readings become prices.