Glossary
Glossary
Price Point
A price point is the specific shelf price chosen for a SKU relative to category competitors and psychological thresholds. The choice determines CVR, impression share, ad efficiency, and total addressable demand simultaneously.
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A price point is the deliberate choice of where to set a SKU's shelf price along the category's price ladder. It is not the same as ASP (which is observed after the fact); price point is the upstream decision that produces the ASP.
Why price point dominates PPC performance
Three independent levers move at once when price point changes:
- CVR. Conversion rate is a step function of price relative to the category median, not a smooth curve. Cross a psychological threshold (€19.99 → €20.49) and CVR can fall 8–15% with no other change.
- Impression share. Amazon's organic and ad ranking incorporates the buyer's likelihood to purchase. A price that is 25% above the category median for the same value proposition will be quietly demoted in the auction — fewer impressions even at the same bid.
- Math-correct bid. Per the canonical formula
Max CPC = ASP × CVR × Target ACOS, a higher price point may raise ASP but lower CVR enough to reduce the bid math allows.
Categories of price points
- Aggressive (below median). Wins impression share, wins CVR, compresses gross margin. Often the right choice during launch (first 90 days) when ranking velocity matters more than margin.
- Median. The default safe choice; competes on listing quality and reviews rather than price.
- Premium (10–30% above median). Requires differentiated value proposition visible in the main image, title, and A+ content. CVR will be lower; the math only works when gross margin per unit grows faster than CVR shrinks.
- Luxury (50%+ above median). A separate game entirely — the buyer is largely brand-driven, not search-driven. PPC plays a smaller role.
Price point testing
A defensible test cadence:
- Move price in 5% increments, never larger.
- Hold the new price for at least 14 days before reading the result (the attribution window needs to settle).
- Measure CVR, impression share, total units, and gross profit per unit simultaneously. Optimising any one in isolation destroys the others.
- Never test price during a peak event (Prime Day, BFCM) — the noise is too high.
Common mistakes
- Price-cutting to "win the Buy Box." If you already own the Buy Box, the cut is pure margin destruction with no impression gain.
- Promotional pricing without updating PPC bids. Promo prices change ASP, which changes the math-correct bid, which the campaign manager forgets to update.
- Treating price as fixed. Most accounts test creative endlessly and never test price — yet price is usually the highest-impact variable.
Related terms
Average Selling Price (ASP)
ASP is the average price a unit actually sold for in a defined period — gross sales divided by units sold. It is the single most important input into every PPC bid math formula and the lever advertisers most often forget they have.
Conversion Rate (CVR)
Conversion rate (CVR) is the percentage of ad clicks that result in an attributed order. It is the most leveraged variable in the Amazon PPC bid formula — a 10% CVR improvement permits a 10% bid increase at constant ACOS, unlocking volume that no bid change alone can deliver.
Buy Box (Featured Offer)
The Buy Box — officially the Featured Offer — is the section of the PDP containing the Add-to-Cart and Buy Now buttons. The seller who wins it gets the click; everyone else routes through the "Other Sellers" link. Losing the Buy Box silently zeros ad conversion.
Gross Margin
Gross margin is the per-unit profit after COGS, Amazon fees, and fulfilment — the pool of money that PPC spend is drawn from. It is the upper bound on Target ACOS and the gating constraint on every bidding decision.
Target ACOS
The maximum ACOS a campaign can run at while still hitting the product's profit goal — derived from gross margin minus desired contribution margin.