Pricing the Products

Pricing is one of the factors affecting a retailer’s profit-potential and bottom line. Some customers look beyond store layout, customer service, ambience, and freebies. Buyers who value low prices should not be overlooked. At any rate, the cost associated with any merchandise serves as the basis for pricing them. Two things are used in determining price; they are namely the cost of goods and operating expense.

Pricing strategy

Retailers may impose mark-up pricing (adding pre-set percentage), vendor pricing (using manufacturer’s suggested retail price), keystone pricing (reselling goods at double the wholesale price), competitive pricing (offering more value than rivals), psychological pricing (setting prices at the “fair” standards of customers), multiple pricing (pricing of bundled goods), and discount pricing (reducing price through rebates, coupons, etc.). Whatever the pricing strategy, retail price should be above the cost of goods and operating expense combined to remain profitable. If price is equal to cost, it is break-even. If below, it is a loss. There is no way for a retailer to survive if he or she continues to operate at break-even or loss.

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