How to Price Products in a Retail Store
The topic of pricing comes up often with retail store owners.
Whether you own a brick and mortar store or an online shop, if you’re buying wholesale and reselling the goods in your shop, pricing is an important aspect of your business.
I often find that shop owners think that pricing is a one-size-fits-all strategy, but it’s not.
Keystone pricing seems to be the most common and recommended formula for pricing and it’s how we started pricing in our store.
Keystone = Wholesale cost of item x2
But, we quickly learned that we can’t and shouldn’t have a blanket pricing structure. Price too low and we lose money, price too high and the inventory will sit for too long.
There’s so much information out on the internet about pricing. I had a plan to write a blog post on this topic a few months ago, but then I found a comprehensive article by Shopkeep on this exact topic.
Shopkeep is a cloud-based iPad point of sale system for retailers. This is not a blog post about their system, I’ve never used it and I don’t know enough about the company to talk about them or their system.
But I do know, that this article is one of the best I’ve seen on pricing, so I’m here to recommend it to retailers.
“For many small businesses, smart product pricing is the key to growth and sometimes even to survival.” -Shopkeep
Here are a couple of tips to help retailers find a good balance with pricing:
- Research – find out what other retailers in your area are doing
- Data – look at your point of sale system information and use it to help you price products in the future
- Customer behavior – pay attention to your customers and how they buy
- Test – implement a few of the strategies suggested in Shopkeep’s article and see what works best
Don’t be afraid to test pricing out. Each of our businesses is different, so don’t assume that all of the items in your store should be priced the same. Take the time to test out different pricing strategies, it’s the only way you’ll know what works best. More importantly, what will be most profitable, for your store.
Click here to read Shopkeep’s article “Pricing 101: How To Price A Product For Retail”
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