When it comes to pricing the products at your independent retail store, the line between pleasing your customers and turning a profit can be a fine one. If a product is priced too high, you stand to make higher margins but it may not sell; if it’s priced too low, you may attract bargain hunters to your store, but you won’t make any money. For the best of both worlds, follow these 5 simple tips.
- One of the easiest and most common ways to determine a price point for a particular product is to see what your competition is selling it for. If a customer were to call each store to compare prices before buying a product, they’ll usually go with the one that’s cheapest – even if it’s by a few cents! Although you may not always be able to undercut the big box stores, scoping the competition will at least give you a good starting point.
- When you’re figuring out how to price your merchandise, it’s important to remember that each sale covers not only the cost of the product, but your other expenses as well. From marketing to administration, your prices should be high enough to cover you even when business is slow.
- When introducing a new product to your shelves, a little experimenting with prices and promotions can go a long way. One of the most popular mind tricks you can use is to price items high while offering a discount. When people think they’re receiving an incredible deal, they’re more likely to make a purchase.
- A big part of pricing products has to do with knowing your target market. Are your customers looking for excellent quality in their products, or something that will simply get the job done? If you know your customers seek only the best products and are willing to pay for them, you can get away with charging a little more. On the other hand, if your main demographic on a particular product is students, discount is the way to go.
- Another trick of the trade that can both increase sales and pad your profits is to inflate the price of particular products – a technique known as “prestige pricing.” Because higher price points create the illusion of greater value, some people don’t mind buying the most expensive product on the shelf. It’s a bold move, but psychology is on your side for this one!