Retail Pricing Strategy

September 9, 2008 | Leave a Comment

These are the factors that can determine your retail pricing strategy.

1) The economics of your business will determine your lowest selling price. This depends on your current mark-on that you use in your pricing. Your mark-on has to ensure sufficient profits to sustain your retail business. Sometimes, in order to build your sales volume, you can use an adjusted lower mark-on on selected merchandise to price your products.

2) Understanding your product and your customers will give you some pricing parameters. This depends on your market or market niche, and the retail format that you operate. It depends also on the merchandise line that you carry. If you know your customers needs and wants, you will know how high your products can be priced. If your customers believes that to be the lowest possible price, that will be the price they are prepared to pay.

3) Your experience and knowledge of the local retail market conditions should give you an indication of the price resistance level for the product. In view of the current rise in prices, it is impossible to maintain the price at the previous level beyond a certain time. Since market conditions has made the previous price unmaintainable, you should push your price to the next level.

4) How you present the product in your retail store plays an important part in your pricing strategy. Of course, this depends on your retail format or concept, and on how and where you display the merchandise. Seasons and holidays also play a role, as well as your inventory levels.

If you want your customers to accept your pricing strategy, it has to be realistic and fair. If your customers needs that product, they will respond to your pricing if they believe your price is fair. You can further seal the sale if your retail store has a clear purchase return policy.

Posted by | Filed Under Pricing