Free Marketing Management Books

Free Book: How to Set Prices in a Retail Business

How to Set Prices in a Retail Business

A Step by Step Guide to Pricing in a Retail Store (Pricing Strategies)

How to Set Prices in a Retail BusinessThis guide will walk you step by step through all the essential phases of setting optimal prices in a retail business. You will learn exactly how to set prices in a way that will allow you to make money and still be competitive

Table of Contents

1. Introduction
2. How to Set Prices for Optimal Profitability
3. Target Consumers and the Retailing Mix

4. Supplier and Competitor Considerations in Setting Prices
5. Setting a Price Level Strategy
6. Setting Prices Store Policies
7. Taking in Consideration the Nature of the Merchandise
8. Market Environmental Considerations
9. How to Raise Prices Without Losing Customers
10, Calculating Hourly and Project-Based Pricing

Click Here! to Download the Free PDF eBook

Sample Content

This Setting Prices in a Retail StoreGuide is a checklist for the owner-manager of a retail business. These 51 questions probe the consideration - from markup to pricing strategy to adjustments - that lead to correct set prices decisions. You can use this checklist to establish setting prices in your new store, or you can use it to periodically review your established pricing policy.
A retailer's set prices influence the quantities of various items that consumers will buy, which in turn affects total revenue and profit. Hence, correct setting prices decisions are a key to successful retail management. With this in mind, the following checklist of 52 questions has been developed to assist retailers in making systematic, informed decisions regarding pricing strategies and tactics.

This checklist should be especially useful to a new retailer who is making pricing decisions for the first time. However, established retailers, including successful ones, can also benefit from this Guide. They may use it as a reminder of all the individual pricing decisions they should review periodically. And, it may also be used in training new employees who will have pricing authority.

How to Set Prices for Optimal Profitability

A major step toward making a profit in retailing is selling merchandise for more than it cost you. This difference between cost of merchandise and retail price is called markup (or occasionally markon). From an arithmetic standpoint, markup is calculated as follows:
Dollar markup = Retail price - Cost of the merchandise.
Percentage markup =
Dollar markup
Retail price

If an item cost $6.50 and you feel consumers will buy it at $10.00, the dollar markup is $3.50 (which is $10.00 - $6.59). Going one step further, the percentage markup is 35 percent (which is $3.50 divided by $10.00). Anyone involved in retail pricing should be as knowledgeable about formulas as about the name and preferences of his or her best customer!
Two other key points about markup should be mentioned. First, the cost of merchandise used in calculating markup consists of the base invoice for the merchandise plus any transportation charges minus any quantity and cash discounts given by the seller. Second, retail price, rather than cost, is ordinarily used in calculating percentage markup. The reason for this is that when other operating figures such as wages, advertising expenses, and profits are expressed as a percentage, all are being based on retail price rather than cost of the merchandise being sold.

Target Consumers and the Retailing Mix
In this section, your attention is directed to price as it relates to your potential customers. These questions examine your merchandise, location, promotion, and customer services that will be combined with price in attempting to satisfy customers and make a profit. After some questions, brief commentary is provided.

1. Is the relative price of this item very important to your target consumers?
The importance of setting prices depends on the specific product and on the specific individual. Some shoppers are very price conscious. Others want convenience and knowledgeable sales personnel. Because of these variations, you need to learn about your customers' desires in relation to different products. Having sales personnel seek feedback from shoppers is a good starting point.
2. Are set prices based on estimates of the number of units that consumers will demand at various price levels?
Demand-orientated pricing such as this is superior to cost-orientated pricing. In the cost approach, a predetermined amount is added to the cost of the merchandise, whereas the demand approach considers what consumers are willing to pay.

3. Have you established a price range for the product?
The cost of merchandise will be at one end of the price range and the level above which consumers will not buy the product at the other end.
4. Have you considered what price strategies would be compatible with your store's total retailing mix that includes merchandise, location, promotion, and services
5. Will trade-ins be accepted as part of the purchase price on items such as appliances and television sets?

Supplier and Competitor Considerations in Setting Prices
This set of questions looks outside your firm to two factors that you cannot directly control - suppliers and competitors.
6. Do you have final pricing authority?
With the repeal of fair trade laws, "yes" answers will be more common than in previous years. Still, a supplier can control retail prices by refusing to deal with non-conforming stores (a tactic which may be illegal) or by selling to you on consignment.
7. Do you know what direct competitors are doing price-wise?
8. Do you regularly review competitor's ads to obtain information on their prices?
9. Is your store large enough to employ either a full-time or a part-time comparison shopper?
These three questions emphasize the point that you must watch competitors' prices so that your prices will not be far out of line - too high or too low - without good reason. Of, course, there may be a good reason for the out-of-the-ordinary prices, such as seeking a special price image.

Other books in this category that may interest you:

Sidebar: you are invited to visit our car insurance information section featuring a list of articles that may save you hundreds of dollars on your motor vehicles quotes. In full coverage auto insurance you'll discover helpful tips to getting cheap quotes. For information on how to get cheaper quotes on shorter terms see one month car insurance and also short term car insurance. For first time drivers information see cheap car insurance for new drivers. How about obtaining cheaper premium rates for mature women? no problem, look here, best insurance for new drivers over 25 year olds.

If you are interested in a half year duration see 6 month car insurance for helpful tips on the topic. How about getting more favorable premiums costs for younger drivers? see car insurance for 17 year olds and motor car insurance for under 21 and vehicle insurance for male and female under 25 years old. Here is another list of drivers insurance useful articles, As for helpful tips regarding no deposit premium payments see car insurance with no deposit and for a list of low cost brokers, agents and companies see car insurance with no deposit companies. Read the following informative article if you are looking for better rates for the young drivers in your family, cheaper vehicle insurance for young drivers. Now, for discovering new ways to get lower quotes go to general car insurance Read this article if your after high risk car insurance information.

How about getting a better deal on first time driver? just click the link. It may come a time that you'll be interested in canceling your policy, use this article for the instruction of how to do it. Our drivers insurance hub page features a list of guides that can surely help you get dirt cheap car insurance for teens drivers rates. For those of you who seek cheap quotes for a shorter term policy, read this article. and here are tips and advice for special interest groups such as young drivers and temporary insurance.

If you have first drivers in your family look here for useful advice regarding cheap drivers first car insurance on getting very very cheap car insurance quotes, other types of policies can include the following: no deposit car insurance, pay monthly, insuring classic cars for young drivers, getting better deal on cheap liability car insurance cost, locating good rates for new drivers. how about if you are interested in pay as you go auto insurance? yep there is a guide for you. And here is a list of car insurance companies cheapest. And the list concludes with a way to calculate car insurance estimate without personal information.

Disclaimer: While every effort is made to ensure that the content of this website is accurate, the website is provided “as is” and makes no representations or warranties in relation to the accuracy or completeness of the information found on it. While the content of this site is provided in good faith, we do not warrant that the information will be kept up to date, be true and not misleading, or that this site will always (or ever) be available for use. Nothing on this website should be taken to constitute professional advice or a formal recommendation and we exclude all representations and warranties relating to the content and use of this site.

Copyright © by Bizmove. All rights reserved.

Copyright © by Bizmove. All rights reserved.