3 Steps to Successfully Pricing Merchandise
Customers love sales, but they also love to feel they paid the right price in the first place.
If you’re a retailer and you’re seeking to continuously engage customers with merchandise for which you both have an emotional connection, you got to price merchandise to move. Because if the price is too much, the buyers may balk; too little and they’ll wonder what’s wrong with it.
- The Break-Even Point - At what price do you start making money? It would be great if all retailers took some kind of course in running a business, or if “do what you love - the money will follow” worked every time. They don’t and it doesn’t. If you haven’t taken a business course but still want to know if your operation can stay afloat, perform a break-even analysis on your business ASAP. Like it sounds, break even analysis helps you determine the break-even point for selling your merchandise. (Don’t forget to factor in the wholesale per-unit price you are paying for your merchandise.) Obviously, you want to do more than break even, but knowing how much your business is costing you to run is vital to having a healthy one.
- What Price Sells - What will the market bear for your goods? Another Business 101 question. If you are planning to specialize in certain products, do online research to see how other sellers are pricing those items. One easy way to do this is to offer goods on eBay (if you don’t already). Use eBay’s selling tools to test different prices to see which moves faster, and see if those prices can be applied to your shop merchandise. Shopify also has strategies that can help you hone your retail price, and the Retail Owners Institute provides additional free information in 55 markets.
- The Bottom-Line Price - How much should you actually charge in your store? All items should have three prices:
1) Retail price, which is the asking price;
2) The Sale Price, which is a discount and,
3) The Negotiated Price, which is a further discount based on factors like bulk purchases or bundled products.
Each of these prices should be determined by break-even analysis, what the market will bear, wholesale markup and the variables as noted by Shopify.
Remember, your retail pricing is a huge part of your overall marketing strategy. It ensures foot traffic, repeat business and good word-of-mouth advertising. The occasional sale sign in the window is also a part of the marketing strategy, but don’t let it become a habit. Customers love sales, but they also love to feel they paid the right price in the first place.