Price floor: how low can the price go before you lose?

Today's ROI tells you little about next month. Your price floor tells you how much room you have if the price falls.

What the price floor is

The price floor is the selling price at which a product's profit reaches zero, after Amazon's fees and all your costs. Because the referral fee shrinks as the price falls while the FBA fee stays the same, you cannot simply subtract a percentage. It has to be calculated per product.

Read it as room to fall

If the Buy Box is $29.99 and your floor is $21.80, the price can fall about 27 percent before you lose money. A product with only a few percent of room is fragile. One with 25 percent or more is much safer to hold.

Two floors are better than one

The break-even floor shows when you start losing money. The target floor shows the lowest price at which the product still meets your ROI and profit targets. The space between them is where a product stops being worth buying but is not yet a loss.

Test steps down the ladder

Look at profit at 5, 10, 15, 20 and 25 percent below today's price. If a product still earns a positive return at 10 percent lower, it has a margin of safety. If it turns into a loss at 5 percent, think hard before ordering.

Add more sellers to the picture

Prices rarely fall alone. More sellers also split the sales between them. Wholesale Analyzer simulates 3, 5 and 10 more sellers and shows how much of your monthly profit you would keep. It is a planning guide built on stated assumptions, not a forecast.