Retail pricing is the price that consumers pay for a product once it’s finished and sold. The main objective of retailers when pricing products is to maximize profits by as much as possible. When it comes to retail pricing, the customers buying items are not going to resell them. This means retailers can charge much higher prices than they would for wholesale. Wholesale pricing is called manufacturer pricing, so shouldn’t be confused with retail pricing.
If you are the owner of an e-commerce or physical retail store, then retail pricing is something you need to know about. This post will cover everything you need to be aware of.
Pricing Software
If you are struggling to manage your own retail pricing efforts, then you might want to consider investing in software. You can click here to learn more about retail pricing software, from a company that offers it. The benefits of retail pricing software are many, and they include greater accuracy, increased sales, better pricing strategy integration, higher margins, and lower costs. Such software does not cost that much and will improve your company’s retail pricing efforts. Do the research and find software that’s reliable and high quality, if you are going to use it.
MSRP
One popular retail pricing strategy is MSRP, or ‘manufacturer suggested retail price.’ This strategy is perhaps the one that’s most familiar to customers and retailers. It involves selling products for a price outlined by the product’s manufacturer. More often than not, this strategy is not good for maximizing profits. However, the trouble with this pricing strategy is that if the product is not unique to your business, then other retailers will be selling it for the MSRP. This means that you can’t charge extra for it, because then people will go elsewhere to buy it. With this pricing strategy, you are trapped.
Being Competitive
When pricing products not unique to your business (i.e., ones sold by manufacturers to many different businesses at once, like Pepsi) you should price items competitively. You can’t sell products for more if each item is labeled with an MSRP, which many products are today. However, you can sell more products and make more profit by pricing items below the MSRP. Pricing items below the MSRP might not make you big profits from individual items, but you will sell a greater volume of items.
Making Profits
When it comes to pricing strategies, profit should be at the front of your mind. Don’t think about anything other than profit. You need to maximize profits as much as you can or increase the volume of items you are selling. If you are selling products sold by other retailers too, then go into their stores and see how much they are selling items for. If your products are unique, then look for similar products, and price accordingly. If your products are the best on the market, then you can charge more.
Overcharging Customers
Don’t overcharge customers just to turn a profit, though. If consumers can buy a product that’s similar to yours in quality and sell elsewhere for less, then that’s what they will do. Due to the internet, people have more choices than ever. Consumers are not stupid. They know when they are getting a good deal, and they know when they are being ripped off. If you try to rip people off, then they will just shop elsewhere. After all, why would they want to do business with you if they can save money by shopping with another retailer?
Promotional Sales
Try to hold promotional sales once every few months. Holding promotional sales can help you significantly increase your profits. If you hold too many promotional sales though, then it can damage your reputation and brand image. When businesses hold weekly or even daily sales, it can make them look cheap, like they are just giving things away. Promotional sales can be an effective way of increasing profits, but also a pretty effective way of ruining one’s business. You should also offer discount codes to consumers who sign up for your site’s email newsletter.
Charm Prices
Finally, consider selling things at ‘charm prices.’ Charm prices are prices ending in .99 or .95 to make them seem cheaper. The use of charm prices can be a very effective way of increasing your business’s sales. They are a great psychological technique for convincing consumers to buy more from you. Charm prices make them feel as though they are getting a good deal, even if they aren’t.
Retail pricing is something you need to spend a lot of time thinking about. Not pricing products effectively could lead to your store’s sales dwindling. You can use software to price more effectively. Consider using charm prices, also. Charm prices can be a highly effective way of increasing your store’s sales.
