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The price is what someone is willing to pay!

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One of the most important questions any retailer must answer daily is about pricing your merchandise. Is the price right? are you charging too much or too little for your goods? Is it better to price high and drop gradually to find that sweet spot or is it better to price aggressively to keep a steady volume of sales and turn merchandise quick? The answer depends on you, your goals and your merchandise. There is no right or wrong answer, your strategy is good if you are generating a healthy profit. So what are the factors that you must consider when determining your pricing? Here are a few important points that you should consider:

  • So what does It actually cost you?- ask yourself a question, the shoes you are wearing right now what did you pay for them? Chances are, many of you can remember the price down to the cent but now tell me what was the actual cost to get them on your feet? Did you pay shipping charges? If not, how did you get to the store to purchase them? did you drive or take a bus or a train? What was the cost of getting to the store and back with your purchase? What we are saying is that a lot of retailers particularly smaller independent retailers will make the false assumption that their base cost is the price they paid for their merchandise without factoring in any of the associated costs. What are the costs that you need to factor in? obviously any shipping cost associated with the merchandise but how about stuff like packing materials, seller fees and employee costs have a full picture of the actual cost of your merchandise before you start selling the items.
  • Are you a tortoise or a hare- do you prefer to ship just a few items per week but make a very healthy margin for those sales or do you like fast and furious making a little on a lot of transactions basically are you a tortoise or a hare? Tortoises price at the higher end of the price range for the goods they specialize in, sacrificing volume sales to healthy margins this method typically works well with premium high dollar items. More of a hare? Pricing aggressively works well for low and median priced items keeping margins tight will allow for more rapid turnover of merchandise steady sales are always a big plus. If neither of these strategies works right for you why not try a hybrid of them both?
  • Understanding the market- Pricing depends a lot on where you are selling your merchandise it’s important to monitor your pricing and this can be tricky at times as marketplace prices are constantly fluctuating but there are ways to do it. Ebay is a fairly easy one to check, you can search current listings and see previous sales results for virtually any item under advanced search settings. Amazon is a bit trickier to follow but sites like camelcamelcamel.com can be used to track the sales trends on a particular item and give you a better idea of how to price the item.
  • Employ some psychology- ever wonder why prices so frequently end in .99 or .95? it’s simple human psychology our minds register only the numbers before the decimal place, so why leave money on the table by not making your price end in .99 or .95? Another common perception is if the item is priced too low the customer might assume it is a inferior product, instead of lowering the price when an item does not sell maybe raise it and see what happens; you will be surprised how frequently this works. 

The right price unfortunately is a moving target but with a bit of patience and knowhow you can keep it in your sights at all times.


 

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