Decide whether you are a discount store with product always on sale, or a higher priced store with one-of-a-kind type product or something in between?
Here are some questions you should be asking yourself each time you bring a new line into your store.
- Can I make money selling this product?
- Will my customers pay the money I’m asking?
Let’s look at the two extremes
A discount store is always about best prices in the area, which can mean prices just above cost.
A high priced store counts on getting customers in regularly at the beginning of each season; counting on selling products at full markup because they are unique, and what the customers want, when they want it.
What you pay for your product, what you sell it for, and the difference, is your margin.
Ideally, you want to sell greater volumes of product at higher margins. Also, your marketing activities must focus on getting more customers coming to your store earlier on in each season buying your products at higher markups. One way to give this idea the best shot is to be strategic about attracted new, and existing customers to your store regularly, monthly e-blasts or mailers, referral programs bringing in new customers, and loyalty programs bringing in existing customers more frequently.
Lets look at the right pricing for the marketplace you find yourself in. Here are the guidelines for figuring out your market place – draw a circle on a page with a dot in the middle. The distance from the dot that is your store location to the edge of the circle is 30 km. That is the average distance a consumer will travel to shop. Your circle or market place zone also shows you what other stores are located there. Make sure your pricing is competitive or at least you know what is going on in other stores like yours. You do not want to be caught off guard. In addition, this zone will tell you how many potential customers live and work in your market place. Finding out if your customer profile fits with the demographics of the area is vital to understanding if you are pricing your products correctly.
Perceived value pricing
There are times when you will buy products at a unbelievable price, and be able to mark it up beyond traditional markups – Pashmina scarves anyone! No matter where I travel in Canada, I come across these scarves. They are selling well because even at these incredible markups customers scoop them up because of their great value.
Last idea for you. What does your store look like? Does it support your pricing strategy? Check this out; is your store telling the right branding message, or confusing the consumer one way or the other? So back to the first idea I shared with you; are you a discount store, a high priced store, or something in between?