Repricer minimum price: how to calculate it without losing money on every sale

When setting up a repricer, all the attention goes to the strategy: chase, stay close, go up. The minimum price is often set in a hurry, with a round figure that looks safe, and then forgotten.

Yet it is the number that determines the worst sale the software is allowed to make, and the repricer will find it, especially at times of greatest competition, when volumes are highest.

Let’s explain it in more depth.
A reminder that the ZonWizard Repricer will be available soon and will do this calculation automatically. Subscribe to the newsletter to stay up to date on the Repricer launch.

What is the minimum price?

The minimum price is the lowest price to which the repricer can take your offer. Its purpose is therefore to prevent automatic competition from pushing you below the point where selling is worse than not selling.

For this very reason, the minimum price should certainly not be decided on instinct. Instead, it should be calculated starting from one question: how much does each unit sold really cost me?

The costs to include

Almost everyone includes the purchase cost and the fees. The real cost per unit includes more:

• Purchase cost and arrival at the warehouse: price of the goods, transport, duties, any inspections.
• Referral fee: a percentage of the price, which therefore changes when the price drops.
• Amazon logistics costs (FBA): order handling and shipping.
• Storage: a share for each unit sold.
• Returns: in addition to the refund, also handling costs and units that come back unsellable.
• Advertising: if the sale also comes thanks to ads, the cost per unit is a selling cost in every respect.
• VAT: on Amazon.it the displayed price includes VAT (22%), which is not your revenue.

Returns and advertising are the two costs that sellers forget most often, and they are often the ones that turn a seemingly safe minimum price into a loss.

The formula

Split the costs into two groups: those that do not depend on the price (purchase, logistics, storage, returns, advertising in absolute value) and those that do depend on the price (VAT and percentage fee).

• Fixed costs per unit = purchase + FBA logistics + storage + returns cost + advertising per unit
• Minimum price = (Fixed costs + desired minimum profit) ÷ (1/1.22 − % fee)

The denominator shows how much you keep from each euro of price after VAT and fees. With VAT at 22% and a 15% fee: 1/1.22 − 0.15 = approximately 0.67. In practice, every euro paid by the customer leaves you about 67 cents to cover fixed costs and make a profit.

Two important rules:

1. Use advertising in euros per unit, not as a percentage. This way, when the price drops, the cost per click does not drop with it.
2. Calculate the fees at the minimum price, not at the list price.

Example: price set on instinct vs correct price

Let’s take the example of a product listed at €34.90 with the following illustrative figures (it is always worth checking the fees in Seller Central):

Item	Amount
Purchase + transport to the warehouse	€9.00
FBA logistics	€4.80
Storage	€0.30
Returns (8% × €6.00 cost per return)	€0.48
Advertising per unit	€3.20
Total fixed costs	€17.78

The minimum price chosen on instinct: €24.90, because “it’s more than double the purchase cost”. Profit at that price:

0.67 × €24.90 − €17.78 = −€1.10 per unit

A loss on every sale. Also note that advertising, which at €34.90 accounts for 9.2% of the price, at €24.90 accounts for 12.9%: at the low price the product costs more to promote.

The correct minimum price, with a minimum profit of €2.50 per unit:

(€17.78 + €2.50) ÷ 0.67 = €30.28

The right minimum is €5.38 higher than the one chosen on instinct.

How much getting it wrong costs

Let’s assume 600 units a month and that the repricer stays close to the minimum for 25% of sales during periods of strong competition:

• Units sold close to the minimum: 600 × 0.25 = 150
• Loss per unit: €1.10
• Monthly loss: €165
• Annual loss on a single product: €1,980

And the problem is invisible: good volumes, high Buy Box, growing revenue. The only indicator that shows it is net profit per unit.

Set the minimum above break-even

Break-even (€26.55 in the example) is the price at which you earn zero. Setting the minimum exactly there means that the best possible outcome in that situation is no profit. Always add a minimum profit, even a small one: it protects you from wrong estimates on returns and advertising.

When selling below break-even is a legitimate choice

It is not always a mistake, as long as it is deliberate and has a limit:

• Launch, to build ranking and reviews, with a calculated payback time.
• Clearing old stock, when keeping it in the warehouse costs more than the discount.
• Temporary defence against a competitor, with an end date.

The difference is knowing that you are doing it, for how long and at what total cost.

Best practices

• Calculate the minimum per product, never the same for the whole catalogue.
• Recalculate it with every new order at a different cost, after changes to Amazon fees and after a new measurement of dimensions.
• Check how much time each product spends close to the minimum: if it is a lot, the problem is positioning, not the repricer.
• Verify the fees actually charged, not just the estimates.
• Look at net profit per unit, not just revenue.

Common mistakes

• Using the purchase cost as the minimum.
• Setting the minimum as a percentage of the list price.
• Forgetting VAT, returns and advertising.
• Not updating the minimum after a cost increase (transport, duties).
• Lowering the minimum when many sales happen close to it: that is the response that makes the situation worse.

Frequently asked questions

The repricing strategy decides how much you earn on good days. The minimum price decides how much you lose on bad ones, and bad days come precisely when competition is strongest. Calculating it with real costs takes a few hours per product and usually brings to light margin you didn’t know you were losing.

With all this in mind, as usual we conclude our in-depth article with a series of answers to the most frequently asked questions on the topic.

Should the minimum price include advertising? Yes, if the product needs ads to sell at its current volume. Otherwise the minimum is only sustainable for organic sales.

How often should I update it? With every arrival of goods at a different cost, after every fee change and at least every quarter.

What minimum profit should I set? Enough to absorb estimation errors on returns and advertising. Even a few euros per unit make the difference between a worst case at a loss and one at break-even.

Can I set the same minimum for several products? Better not: costs and fees differ, and a single minimum leaves some products at a loss and others with unused margin.

Remember that with the ZonWizard Repricer you set the strategy’s minimum net margin and the minimum price is determined for each listing, without keeping separate spreadsheets to update with every order. If a product needs a different limit, you can customise the minimum and maximum price of that single listing.

The ZonWizard Repricer will be available soon. Subscribe to the newsletter to stay up to date on the Repricer launch.