Pricing is an important factor in running a successful retail business. However, deciding on the right price can be challenging. Multiple variables go into determining the right price, including status, value, and even emotional gratification. Buying things can invoke feelings of satisfaction and happiness. As a retailer, choosing the right price helps identify the core values of your brand, your stores, and your products.
HOW TO DEVELOP RETAIL PRICING STRATEGIES
TRAFFIC DRIVERS
While pricing helps control profit margins, the wrong price can alienate customers and force them to look for an alternative. You can establish a price based on customer acquisition costs. You must have a good understanding of your product costs. Consult with your sales and marketing team about your store’s most popular items. This should help you determine whether to mark up your prices and the amount you can realistically sell.
Analyze the competition. Research your competition and think about the industry-wide pricing in retailing. Make sure that your products are in a similar price range as your direct competition. If your retail price is too low, you are missing a potential opportunity. If your price is too high, your customers may turn to a competitor.
EFFECTIVE RETAIL PRICING STRATEGIES TO CONSIDER
1. MSRP
The Manufacturer Suggested Resale Price is the price that a product maker recommends that you sell your products for. While manufacturers cannot dictate the prices through the resale process, they can offer suggestions on how you should distribute products. If you offer products online, then you should abide by the MSRP.
2. MULTIPLE PRICING
Multiple pricing occurs if items are priced at a discount rate if you purchase two or more of them at once. Multiple pricing items usually are very appealing to consumers who are often on the lookout for discounts. Multiple pricing is also a great way to market end of season items.
3. BEST VALUE
Best Value pricing is all about the customer. This type of retail pricing is based on the amount that your customers believe an item is worth. It’s about figuring out the difference between an item’s cost and its quality. Value pricing allows you to gauge customer interest in different products. However, gathering all of the information takes time. It requires a detailed understanding of what your target market is looking for.
4. MARKET PENETRATION
Market penetration pricing relies on discounts. Normally, this type of pricing is used in a competitive marketplace. You can use this strategy to attract disgruntled customers who are assessing their options. You’ll have to start by offering a low price with the idea that your customers will love the service and eventually decide to pay for the full price in the future.
5. LUXURY PRICING
Luxury brands are built on prestige. Luxury retailers know that their customers are willing to pay more because they admire the status that comes with purchasing a luxury item. If you plan to sell items in this market, make sure that every part of your product provides a high-end experience for your customers.
6. PSYCHOLOGY IN PRICING
A large part of pricing is based on an estimate of people’s senses. There is a psychological element. Pricing is closely related to marketing. Your brain is wired to think a certain way. Look for unique ways to give your customers a different experience.
7. BUNDLES
Bundle pricing can be an asset. Market the package as a beneficial experience for your customers. Try to group similar items or items that are compatible with each other. Offering bundles allows you to place a group of items together at one price.
Using these retail pricing strategies can help you gain an advantage in a competitive marketplace. Take time to figure out which strategy is best for your business.
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