Introduction
In the competitive world of Amazon selling, many brands make the mistake of separating pricing and advertising into two different conversations. But according to Chad Rubin—serial entrepreneur and thought leader in the Amazon space—the truth is clear: pricing and ad spend must work together if you want to grow sustainably.
This guide breaks down Rubin’s approach to pricing and advertising, why contribution margin matters more than revenue, and how to build a system that scales your Amazon sales without sacrificing profit.
Why Contribution Margin is the True North
Most sellers fixate on top-line revenue. But Rubin emphasizes contribution margin—the profit left after Amazon fees, fulfillment costs, advertising, and pricing adjustments.
By focusing on contribution margin instead of raw sales, sellers can make smarter decisions about:
- When to push ad spend
- Where to hold firm on pricing
- Which SKUs are truly profitable
Smart Pricing Strategies from Chad Rubin
- Repricing with Guardrails
- Automated repricers are valuable, but only if you set rules that protect margins.
- Define a minimum viable price that covers costs + desired profit.
- Price Testing for Conversion Optimization
- Small changes in price can dramatically shift conversion rates.
- Rubin recommends structured A/B tests to find the sweet spot between price and volume.
- Bundling for Margin Expansion
- By creating bundles or multipacks, sellers escape direct price wars.
- Bundles often justify higher pricing while increasing order value.
Ad Spend & Pricing: Two Sides of the Same Coin
Rubin stresses that advertising cannot be isolated from pricing:
- Lower TACoS through alignment:
If your price is too high for the market, ad spend becomes inefficient. If your price is too low, you erode profits even when ads drive sales. - Price-Informed Ad Bidding:
Adjust bids based on pricing position. For example, when priced at Buy Box parity, bids can be more aggressive; when priced high, bids should throttle. - Momentum Building:
Use ad spend to accelerate sales velocity after pricing is dialed in. Velocity signals feed Amazon’s A9 algorithm, lifting both paid and organic visibility.
Scaling with Contribution Margin in Mind
Rubin advocates for regular contribution margin audits:
- Calculate CM per SKU (price – fees – fulfillment – ad spend).
- Cut underperformers quickly.
- Double down on SKUs that scale profitably.
This discipline ensures that ad spend isn’t wasted on unprofitable items and pricing adjustments always serve the bottom line.
Common Pitfalls Sellers Make
- Chasing revenue growth while ignoring profit.
- Over-investing in ads without testing pricing.
- Letting repricers drag prices too low.
- Neglecting TACoS as a key performance metric.
Case Study Example
One mid-sized electronics brand spent heavily on PPC but struggled with shrinking margins. After applying Rubin’s framework:
- They raised prices 8% after content upgrades.
- Ad spend was reduced on unprofitable SKUs and reallocated to winners.
- TACoS dropped from 18% to 12% in 60 days.
- Contribution margin improved 22% across the portfolio.
The Future of Pricing + Ad Spend Strategy
Amazon is moving toward a holistic performance model, where pricing, ad spend, and organic ranking are more intertwined than ever. Sellers who treat these as connected levers will outpace competitors who continue to silo their strategies.
Conclusion
Chad Rubin’s pricing and ad spend strategies challenge sellers to think differently:
- Don’t chase revenue. Chase contribution margin.
- Don’t isolate pricing. Align it with ad efficiency.
- Don’t play the race to the bottom. Use smart tactics like bundling and value-based pricing.
By adopting this mindset, sellers can win more Buy Box share, scale profitably, and future-proof their Amazon businesses.
