We offer a free PDF of the commonly use Amazon Acronyms that you can print out and use as a reference. You get your copy here.
ASP, or Average Selling Price, is the average dollar amount that you make per item sold on Amazon. It’s calculated by dividing sales dollars by the number of items sold. To find your ASP, follow these steps:
- Log in to Seller Central.
- Hover over Reports.
- Click on Business Reports.
- Change the data range of the data to show sales over a long period of time (like “Year to date”)
- Check out your Sales Snapshot – your ASP is the amount listed for “Avg. sales/order item.”
Why it’s crucial to understand and increase your ASP
To take an Amazon business full-time, you need to focus on revenue. High volume and low profit is certainly one way to make money on Amazon. But that requires a lot of work. And it will eat up a lot of your time, and eventually kill your growth. If you’d like to pay yourself a salary from your business and spend less time working, increasing your ASP is a great strategy.
Here’s a few reasons why increasing your ASP makes sense:
- More room for price adjustments.
A $1 drop in price on a $10 item is a reduction of 10%. On 1 $100 item, it’s just 1%. On higher priced items, you have more room to manuver if you need to adjust prices, without eating into profits significantly.
2. Fewer SKU’s to Manage
With less total items listed in seller central, you can focus more on your inventory and track results/manage PPC campaigns more effectively. This allows you to be more on top of your business, and spend less time pouring over thousands of SKU’s and using re-pricers etc. to try and stay competitve.
3. Lower overall FBA Fees
Yes, you read that correctly. With higher priced items, the fixed fees that Amazon charge per item sold become far less significant. A $2 fixed fee on a $10 item is a hit of 20% of the sell price. On a $100 item, it’s an insignificant 2% of the sell price. This makes a big difference long term to profits.
4. Less time spent labelling goods
With lower priced, high volume items you have to prep and label (or pay someone to do it for you) a lot more items. On 1,000 items selling at $10 each, the labeling fee alone to have Amazon do it for you is $200! If you instead sold 100 items at $100 sell price/each the labeling cost is just $20. And, you’ll also save on shipping costs sending in fewer items at a higher price vs multiple boxes of low priced stuff.
Hopefully I’ve explained this in a way that makes sense and you can start to see why raising your ASP can really help in scaling your business and making higher profits? As any realtor can tell you, it often takes the same amount of work to sell $1 Million dollar home as it does a $100,000 home but the payoff is significantly larger for the first. Business is all about focus. Don’t think limiting thoughts around budget and what’s “cheap” to buy. Think, how can I make $10,000 profit, selling the least number of products with the least amount of work?!
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