Question

Explain pricing policies applied to Amazon's e-commerce and cloud computing businesses.

Answer 1

Amazon pricing: The price on Amazon is very competitive. This not only affects your chances of winning the purchase box, but it is also a major contributing factor in the customer's final decision that they should buy from you or another seller.

  There are two types of prices on Amazon than any seller should be familiar with, these are the price of the item and the total price.
The price of the item is simply the cost of a product. The customer shipping cost of this price and any other factors that may affect the total price
The total price, or landed value, is the price that all items include — this is what the customer pays at the end of the purchasing process. The total price includes the following:

•   Shipping and handling charges
• Discounts, discounts, or special sales/promotions
• Shipping method
• Business procedures, such as reduction or completion of shipping charges on an order, or fees and expenses related to any other order.
• Low price guarantee

There are four types of pricing policies :

When it comes to pricing on Amazon, there are 4 main types of strategy. As Amazon doesn't always give the cheapest seller a purchase box, there's a lot to play for. There are 4 strategies you can use when selling on Amazon :

1.) Economy: An economy is a strategy that uses small profit margins with low advertising costs. The goal is to make the product available to a larger market. Its shipping costs are much lower and rarely depend on the selling price. Is a useful strategy for products that meet everyday requirements such as detergents.

2.) Premium: The premium strategy takes an opposite approach to the strategy of the economy. It is usually at a higher price and often uses the brand name to generate additional interest such that the brand name generally has less impact on Amazon, which the premium strategy has. Use, they often discount to generate interest on a higher product. This strategy is most useful for reputable brands in their sector such as Gillette or Lynx / X.

3.) Skimming: The skimming strategy takes an adaptable approach to the pricing strategy. Using this strategy, an Amazon seller often starts at a higher price until the competition matches. The price will be reduced to stay competitive for that time. The strategy is ideal for traders who have a specific product but anticipate the competition coming their way with hope. The reason for this is to maximize profit in the short term before competition arrives. The strategy is aimed at
Sony and Microsoft have examples of these types of brands that over-price their game consoles (PlayStation and Xbox) when they are first released. They then permanently reduce the selling price when competitors release their consoles.

4.) Penetration: The piercing strategy is when you gain market share by lowering prices from competitors. It is commonly used by new brands or existing brands to release new products. In most cases, this is done as a promotion. In which the price increases after the goal is achieved. This strategy is not profitable in the long run. However, it can help to buy the buying box from time to time and then later buy your specific product through brand loyalty. Can generate interest in
This strategy tends to work better on more specialized product platforms, due to Amazon not offering the shopping box at least the cheaper option. This is an example of vegan products, which are generally more valuable and yet do not have an abundance of competition around the world.

PRICING POLICIES APPLIED TO CLOUD COMPUTING BUSINESS:

When talking about pricing on the cloud, several things are kept in mind, the first thing is that the service provider aims to maximize profit and customers are looking for high-quality services at low prices. Secondly, Because of the high providers selling the same service on the cloud, it is very competitive. Also, prices are affected by:
1.) Lease term which can be considered as a contract period between the provider and the customer.
2.) The initial cost of resources.
3.) Depreciation rate, which means how often these resources are being used.
4.) Quality of service.
5.) Age of resources.
6.) maintenance costs.

Pricing models: There are several pricing models used on the cloud, which can be classified into two main types from the perspective of changing times: static and dynamic.

1.) Fixed pricing model :

Permanent pricing models are also known as static pricing models, which are characterized by price stability over a long period. The most well-known service providers on the cloud such as Google, Amazon Web Services, Oracle, Blue, and all, other Fixed pricing models are used.
The fixed price tells the user the cost of doing business and resource usage. However, this type of pricing on the other hand is inappropriate with most customers as they may overpay or underpay for their needs. , It is not affected by demand.
There are many fixed pricing such as "pay per use", membership, price list…

2.) Dynamic pricing model :

Dynamic pricing models are also known as real-time pricing, these models are very flexible, and can be considered as a result of a function that takes other parameters such as price, time, and location, to the user. Known values ​​and other values.
In dynamic pricing, the price is calculated based on the pricing mechanism, whenever there is a request. Compared to static prices, dynamic pricing represents a more promising charging strategy indicating a real-time supply-demand relationship. Is that the user can better take advantage of the payment capability and thus more profit on the cloud provider.
For example, AMAZON changes prices every 10 minutes and good shopping, and Walmart change prices over 50000 times every month.