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Pricing strategies in 2026: Amazon Dynamic Pricing, and the fall of the 99 cent factor

– Written by Jérôme de Guigné

In 2025, eBay flew in the face of decades of pricing psychology when it abandoned seller fees and instead added fees to the price of each item, on a +4% +72p model. So an item that the seller wants to charge a nice round £10 for ends up as £11.12.

While sellers have complained that shoppers don’t like these prices, eBay’s logic is that traditional pricing strategies, including the most famous – charm pricing, aka ‘the 99 cent factor’ – don’t matter as much on today’s eCommerce marketplaces.

In fact, the more ‘random’ looking prices ape Amazon’s dynamic pricing model, which automatically adjusts prices by a few pence or cents depending on conditions such as stock volume and time of purchase.

Jeff Bezos famously said “your margin is my opportunity.” Where once retailer margins would’ve been 50-60% or more, Amazon has massively reduced these margins via fierce competition for the buy box, which rewards lower prices.

With that competition between sellers often coming down to a few pence, plus dynamic pricing, reshaped fee structures,and prices from foreign markets based on the exchange rate, consumers are more used to volatile pricing – and the evidence, including the continued growth of Amazon, shows it doesn’t put them off buying.

Let’s look at some pricing psychology – and how you can ensure your prices not only make you a healthy profit, but also reflect well on your brand.

The psychology of pricing

For decades, marketers have known that there’s more to an attractive price than simply being the lowest.

Charm pricing is the most famous, but there are lots of effective pricing strategies based on shoppers’ psychology. Premium brands often use a round number, presented without decimals, to mark out their product as a luxury, non-budget-conscious item.

For those brands that do want to show off their great value, using the manufacturer’s suggested retail price (MSRP) next to the seller’s ‘slashed’ price is a great strategy for convincing the customer they’re getting a bargain.

Fierce competition in pricing isn’t new, either. The same principles behind the 99 cent factor led to the 95 cent factor: it’s still charm pricing, designed to trick the customer into only seeing the digit on the left rather than the round number, but that four-cent difference can have a big impact on the customer’s perception of the product’s value. And that’s often enough to convert.

(Fun fact about charm pricing: for some reason, it works best with odd numbers.)

In the modern world, some of the most effective pricing strategies are data-based and heavily targeted. Using data and tools, sellers can track repeated visits from customers and use personalised offers to convert them.

We’ve also seen some really fun ‘gimmick’ pricing. Take a look at this restaurant menu, with prices of £15.15, £17.17, and £19.19. (Note those charm pricing-friendly odd numbers!)

Where once there would probably have been £2 between these prices, now it’s £2.22. So the prices are appealing aesthetically, while also being an inflation-busting way to raise prices without hurting the customer’s pocket.

(For more great pricing strategies and the psychology behind them, we love this blog from Shopify.)

There’s no doubt these considered strategies all have their place in eCommerce. But even so, we’re seeing a big shift in pricing from these traditional, psychology-based pricing tactics, to more data-based, volatile and automated pricing.

So let’s talk about Amazon’s Dynamic Pricing model, and how it works for brands.

What is Amazon Dynamic Pricing?

Amazon Dynamic Pricing is a free in-Amazon tool that helps you win the buy box by adjusting prices automatically, depending on various factors such as stock levels and competitors’ prices.

You select Automate Pricing in Seller Central, and Amazon assesses market demand, inventory and traffic levels to lower or raise your prices, often by just a few cents, to help your products convert.

You can see what this does to a traditional pricing strategy: prices look much more random than before. But to the customer, those subtle price differences are often just the push they need to buy.

There are lots of benefits: you can drive up sales volume, increase your visibility, and often boost your Best Seller Rank, as well as winning the buy box.

But be wary of the downsides, too: continuously fluctuating prices can potentially hurt your profit margins, lose customer trust, and cause friction with your manufacturers.

The best way to use Amazon Dynamic Pricing is to be clear on your strategy. It may be automated, but that doesn’t mean you have to give up control.

What’s the best strategy for using Amazon Dynamic Pricing?

Amazon Dynamic Pricing allows you to set up rules to ensure your automated pricing suits your strategy.

You can choose from rules that will adjust your price based on:

Once you’ve chosen your rule, we recommend setting some other parameters, including:

Being quite rigid in how you use these settings will help you make the most of Dynamic Pricing without compromising your margins or your brand.

Are there benefits to not using Amazon Dynamic Pricing?

Trust is a big part of pricing, and how your prices look says something about your brand to the customer.

We find that ‘big name’ brands are more likely to use traditional pricing strategies, and standardised their pricing across all their different products and marketplaces. Whereas challenger brands are generally happier to compete more fiercely on price, and use those more ‘random’ looking prices.

The evidence suggests that optimising your pricing, using traditional tactics like the 99 cent factor, is still really important in the psychology of online shopping. According to Shopify, in a test run by Intelligems the average brand saw a 6% lift in gross profits when they optimised pricing.

So whether you use Dynamic Pricing or set your prices manually will often depend on what kind of business you are, and what message you want to send to your customers. 

Either way, e-Comas can help you optimise your sales on Amazon and any other marketplace – just give us a call.