retail price

Pricing has a tremendous impact on your bottom-line, and the truth is a lot of small retailers struggle to know exactly how much to charge their customers.

How can you get it right? The harsh reality is that fewer than half of new entrants survive after 10 years in business. An August 2018 Investopedia article ranked “money management” as the second of the top five challenges for small businesses – and pricing strategy ultimately has a huge impact on the cash you have on hand.

Part of what makes retail pricing management hard is that there are a lot of different factors that impact what you need to charge – and how much customers are willing to pay.

Managing prices for your entire inventory can be time consuming and inefficient unless you have a strategy or set organizational rules for pricing. To make price management more efficient across your entire retail organization, try incorporating these winning strategies.

First Things First: Know your business costs

The most fundamental thing you need to do when it comes to pricing is getting a good grip on your costs.This includes everything from supplies you buy and the fixed expenses you pay for your retail premises, heating, businesses taxes, internet, phone, alarm, etc.

Even small shop owners have expenses, from your cell phone and Internet bill to parking and business services like accounting and legal advice.

Once you’ve tallied up all your costs, you know how much money you need to pay them off. This helps determines the minimum price you need to set for your product or service.

  1. Set your profit margin-This is a tricky zone. You don’t just want narrow your target objectives to breaking even in your business or to simply offset your costs. Most retailers want to make a decent profit. So how much profit can you reasonably expect to make your business profitable. This will depend on many other factors and tactics.
  2. Assess the competition– Take a look at your competitors’ pricing to determine what ballpark your prices should be in. Whether you price at the same level, above or below it will depend a lot on your business goals, brand and marketplace positioning. If you are offering something unique, you can price a bit higher than others in your competitor category.
  3. Know your (potential) customers– If your customers don’t care that your pots and pans are made with top-grade steel, you really have two choices: start selling a lower-quality product or find a new market segment that is willing to pay more. If you opt for the latter, you’ll need to adopt marketing techniques tailored to that new target – for example, by establishing a website that attracts them or advertising where they are already looking.
  4. Establish zones – A zone can be a geographical region–such as a single city or zip, a state, or several states that you group into a region. For international retail chains, it could be a country. A zone may also be a particular retail chain or department.
  5. Set up product groups – A product group for retail prices may consist of similar items in your inventory, such as “cowboy boots” or “baseball gloves,” or it may consist of items that go together, such as “house slippers and night gowns” or “sofas and throw pillows.”
  6. Plan seasonally– If you want to run seasonal promotions, group all products you want included in your seasonal discount into one group and establish your discounts based on that. If you run the same seasonal promotion every year, you can set your discounts with one click of a button.
  7. Reward loyal customers – Loyalty programs have become very popular, and it’s a great way to reward loyal customers with special retail prices. You can make price changes easy by creating a loyalty group in your price management solution and reward all loyal customers at once.
  8. Use volume triggers – If you want to encourage higher volume purchasing, set a minimum amount of purchase or a minimum number of items in the group, and when a customer hits that minimum it will trigger an automatic discount.
  9. Ride the calendar – You can have a different promotion every month. Simply setup a group for each calendar month and add the items you want to discount in that month. Another variation of this is to use days of the week.

There are many ways to manage retail prices efficiently. Every retail chain is different. Do what is best for your retail operation.

With ChainDrive, you can set up your own promotional rules. You determine what is important for
tracking and establishing discounts. If it makes sense to use another metric, you know your business better than we do.

For many retailers ChainDrive Price Management Software allows you to optimize and control your pricing throughout the product life cycle . Chaindrive pos is a life saver during the pandemic times when most brick and mortar stores were subject to mandatory lock down and extended periods of quarantine measures. If you wish to get more leads in your retail business and get more retail analytics power for your retail engine, you have to enrich your retail business with Chaindrive Price management software.