If you want your Amazon business to be a successful one and not just a hobby, you need to raise your average selling price (ASP). In this episode, we delve into all the benefits of raising your ASP and you’ll discover the direct link between long-term success selling on Amazon and having a higher ASP.
We talk you through how to find your current ASP and explain why raising your ASP makes it easier to scale your business and make greater profits. For those of you who are starting out and feel nervous about selling higher-priced items, we have you covered. We fill you in on how to start raising your ASP incrementally until you feel comfortable. Listen today to find out how raising your ASP will save you time, money, and effort, setting you up for lasting success.
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Key points from Episode 121:
- The link between long-term success selling on Amazon and a high ASP.
- How to view your current ASP within your Seller Central account.
- The top 4 benefits of raising your ASP.
- How to save money on fees by raising your ASP.
- How a higher ASP can save you prep time, money, and effort.
- Why it’s easier to scale your business with a higher ASP.
- The wiggle room it allows you for price fluctuations.
- How a higher ASP means higher profits, and therefore higher disbursements.
- Advice for beginners: how to slowly start experimenting with selling higher-priced items.
- And more!
Links and resources mentioned in this episode:
- Top Amazon FBA Acronyms (freebie)
- Why you should raise your ASP (blog post)
- Where to find your ASP (Seller Central login required)
- The Full-Time FBA newsletter
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Episode 121 Transcript:
[0:00:01.8] ANNOUNCER: Welcome to The Full-Time FBA Show. In each episode, it’s our goal to help you turn part-time hours into a full-time income, selling almost anything on Amazon. Now, your hosts of the show, Stephen and Rebecca Smotherman.
[0:00:21.2] STEPHEN: Welcome to episode number 121 of The Full-Time FBA show. Today, we’re going to be talking about why you should consider raising your ASP. ASP stands for Aver-age Selling Price and we think it’s a good idea that you maybe try to start selling things that are a little bit more expensive and with me to talk about it is Rebecca. How’s it going, Rebecca?
[0:00:39.1] REBECCA: Going great, I’m looking forward to getting into this conversation about the ASP and why you should look into raising it. It is one that I think that a lot of new sellers would probably stand to gain from and maybe some sellers who have been around for a while too and are kind of in a rut and looking for a way to kind of jump start their business.
[0:00:58.5] STEPHEN: Yeah, definitely beginners and those in a rut might be in that rut or not be able to grow past the beginner stage because the prices of their items are just kind of not high enough. Let’s talk about that today, how to raise your ASP? Let’s talk about that today, why you should raise your ASP.
[0:01:22.7] REBECCA: We’re going to be talking about today, raising your ASP or average sell-ing price. That’s an acronym that you’re going to want to keep in mind as you’re getting further into your Amazon FBA business and it’s really important that you start looking at raising that ASP, getting a higher ASP because it is key to having long-term success selling on Amazon.
There are some successful Amazon FBA or FBM sellers who have lower ASPs but they’re rare and they also tend to focus on volume, so they’re selling at a very high volume in order to get the profits, the sales that they need in order to be successful. If you’re wanting to find success and have great profits without having to sell super high volume, looking at raising your ASP is a great way to go about increasing that.
First off, we want to cover in this podcast, how do you even find out your current ASP? You can’t raise your ASP unless you know what it is so that you can compare it to what it is in the future and see if you’ve been able to raise it. This is something that you’re going to do in your seller central accounts. You log in, go to your reports, there’s a tab that will have reports. Under reports, you’re going to look at business reports and then you’ll find your average sales.
[0:02:37.1] STEPHEN: Yeah, on that page, it will automatically, I think, give you your month-to-date average selling price. So maybe you can go in and change it to year to date or you can change the date to including last year, whatever date, time period you want to choose, you can kind of pick that and Amazon will just calculate and give you your average sales price and there’s your starting point, there’s your average selling price and hopefully we can get that up by talking about that today.
Some of the benefits of having a higher average selling price, we’re going to talk about four of them today. The first one is that it can save you a lot of money on fees. I mean, let’s take an ex-ample, we got Harry and we have Sally. They met each other, they fell in love and Harry is selling $10 items and he sells 10 of them, so he gets $100 in sales but Sally sells one item but it’s $100 item.
They both have $100 in sales except Harry is getting killed on fees, so with that $10 item, he is getting probably 60 percent taken away in fees and only be able to come home by 40 bucks at the end of the day in profit from that one particular item he sold 10 times but Sally, she’s a little bit smarter. She sold one item at $100 and maybe had 30 or 35 percent in fees come out, so she’s taking home around 70 bucks.
They both have the same amount of sales but Sally had more profits because the fees add up. The pick and pack fees, the shipping fees, all the different types of fees that add up, it just takes it away. Having a higher average selling price helps you have less go to fees in the long run.
[0:04:08.2] REBECCA: Yeah. In that scenario, I definitely want to be like Sally.
[0:04:10.9] STEPHEN: Yeah, definitely.
[0:04:12.7] REBECCA: All right, another reason why we want to talk to you about how important it is that you look into raising your ASP on Amazon is that it really can save you a lot of time and money, and effort on prepping and shipping. Whether you’re packing and shipping your items yourself or whether you are using a prep center, you’re going to save money and also time if you’re doing it yourself by having a higher ASP.
Because like Stephen said in the first point, if you raise your ASP, you can sell fewer items in or-der to make the same amount, the same dollar amount of sales. Back to that example, if you have 10 items to make $100 worth in sales, you’re going to be looking at possibly 10 price stick-ers that you’re having to remove. Possibly 10 polybags that you’re having to put on or 10 of your bar code stickers that you’re having to put on and whatever other prep, whether it’s bubble wrap or whatever you’re having to do, shoes that you’re having to inspect and process.
You’re going to have 10 of those items that you’re having to process but Sally only has in our ex-ample, one item that she is having to polybag or otherwise prep in one item that she’s printing out a bar code label. She’s saving money on the time that it takes to prep that one item, she’s saving on the supplies that it takes to prep that one item. If she’s not doing her prepping and packing, she’s saving on paying a prep center to do that for her. You’re going to save time and money if you are like Sally and sell your one $100 item as supposed to 10 $10 items like Harry is.
[0:05:49.6] STEPHEN: Yeah, if your thought process is, “Well, it’s not that big of a deal. It’s just 10 stickers, it’s not that big” that adds up over time and that takes away your overall ROI, so we need to change our mindset and try to get more out of less work.
[0:06:04.0] REBECCA: Yeah, this is where the concept of scaling your business comes in. It is much easier to scale a business with higher ASP and get the higher volume than it is to scale a business where you have to process 10 times as many items in order to get that same amount of sales.
[0:06:22.0] STEPHEN: Having a higher ASP can save you on fees, it can help you save time, money, and effort. The third thing that getting a higher average selling price can do for you is to give you more wiggle room for price fluctuations. Obviously, Harry with his $10 sales price doesn’t have much wiggle room to lower it without completely losing his ROI or even possibly losing money, while Sally has a $100 price point and she is able to have a lot more wiggle room.
It gives you more of that anxiety-free sales experience by being able to sell a higher-priced item and be able to have little room to wiggle when you have your repricer setup with trying to meet the competition, keep your price competitive and still be able to come out on top.
[0:07:03.3] REBECCA: Yeah, if you’re selling $10 items and there’s a $1 change in the price, that’s a 10 percent change but if you’re selling $100 item, $1 fluctuation in the price is only a one 1 percent change and that’s a big difference when it comes to looking at your profits down the road.
[0:07:17.1] STEPHEN: Absolutely.
[0:07:18.7] REBECCA: The last reason why we really want you to look at, raising your ASP is that you can also raise your disbursements and this goes back to again, some of the previous points that we were making. If you were paying fewer fees, you’re going to have higher profits and that’s going to mean higher disbursements. The less money that Amazon is taking out of your sales, your overall sales amount, that means you’re going to get more disbursements.
That is more money that you can then reinvest in more high ASP inventory. I mean, it seems kind of obvious but again, it just comes back to that $10 item versus one $100 item. When your profits are increased, your disbursements are also going to increase and so you’re going to be getting a higher disbursement that’s more cash flow and that is great for your business.
[0:08:06.0] STEPHEN: Absolutely. There might be some beginners out there thinking, “Well, buying $100 item to sell on Amazon is scary. I mean, that’s a lot of money to put into one item” and I totally get that. If you’re a beginner or if you’re just now starting to think about raising your ASP, maybe take a percentage of your sourcing capital and decide, “Okay, this percentage is going to go for higher-priced items and this other percentage is just going to go to lower-priced items.”
Maybe start it off doing 50/50 or 80/20, whatever is most comfortable for you, so you can get some experience buying higher-priced items and start to get into that comfort zone, and then once you start getting comfortable with that and seeing the results, you are never going to go back. I mean, you will be able to buy some items at lower prices from time to time. You want to have a well-rounded type of inventory but being able to get your overall average selling price up is a huge big deal.
[0:08:54.0] REBECCA: As we wrap up this episode, we just want to keep coming back to our main point in this is that, if you are wanting your Amazon business to really truly be a successful business and not just a hobby, you really need to look at raising your average selling price and that can be a goal of yours for 2022. You can set goals for each quarter, you can set goals for the entire year, and look at how you’re able to change your sourcing habits so that you are finding items that will give you a higher ASP now and in the long run.
One more thing we wanted to let you know about before we completely wrap up this episode is that, if you are listening to this and thinking, “I need to know more about some of these acronyms that we’ve been using” like ASP, we have you covered. We have a downloadable PDF that you can get for free, signing up on the Full-Time FBA website. If you go to fulltimefba.com/acronym, you will be able to sign up and get that PDF that will explain a lot of the acronyms that you might be hearing either on our podcast or if you’re on Facebook or any other place online where you interact with other sellers and you’re like, “This is a completely different lingo, I don’t know what this alphabet soup means” be sure and check out that acronym download that we have for you at fulltimefba.com/acronym.
[0:10:18.2] REBECCA: Well, thank you once again for joining us for this episode of The Full-Time FBA Show. As always, we want to remind you that the links that were mentioned and the transcript of this podcast episode can be found in the episode show notes at fulltimefba.com/121 because this is episode number 121.
[0:10:36.7] STEPHEN: If we’ve got your curiosity piqued about raising your average selling price, next week on the show we’re going to be talking about the actual how-to. If you’re ready to raise your selling price, be sure to join us back next week as we discuss the actual nuts and bolts in how to raise your ASP. We’ll see you next week on the Full-Time FBA Show.
[END OF CONVERSATION]
[0:10:55.9] ANNOUNCER: That is all for this episode of The Full-Time FBA Show. So, head over to fulltimefba.com/podcast, where you will find the show notes and links from this episode. While you’re there, subscribe to our newsletter where you’ll get several free downloads of our popular and helpful Amazon FBA resources. Now, take action on what you have learned today so you can find success at turning part-time hours into a full-time income with Amazon FBA.
This has always been my favorite metric. It’s totally beyond me as to why so many sellers—even smaller sellers—are willing to undercut by a penny or more no matter what, as long as they “get the next sale.”