For all retail managers, profit is always a crucial element when pricing products. However, as customer satisfaction is also a survival key, a smart pricing strategy which is done accurately and in a timely manner is a must.This article presents six common pricing mistakes that retailers should avoid.1. Phony savings
Placing price tags that are higher on top of originally tagged items that were lower may upset your customers. For example, you will make the customer madder if you put a mark down price of $13.99 on a $20 item while this item marked at $10 in its original price tag.Thus you had better prepare a razor blade to scrape all of the other prices away if you ever want to change the price.2. Mispricing
Having your staff trained to mark the entire inventory in the store is also a must for retailers. Although a POS system will charge the correct price when scanned, your customers will require the posted price on a mismarked item. If your staff couldn’t deal with it, it may results in losing your profit margin so you should fix it by having someone spot-check.3. Markup errors
Since every smartphone has a calculator, finding out the markup on a product is not so difficult. However, it’s not that easy to find a person to do that work responsibly and correctly. If the storeowner can figure out the exact selling price when he/she orders the item, over or underpricing may not happen.
4. Magnified Perception of Worth
On some occasions there is such a great deal on a line that you immediately seize the chance to mark it up. It pays, however, in both inventory turnover and gross margin, to just charge the same price as that of comparable products from other vendors.
In most cases, behind every good deal, there is a reason that you might have yet to discover from your vendor.5. Under Perception of Worth
Pricing an item under keystone is not a good idea, for this will decrease your chance to be profitable on the product. After the whole process of finding the product, then shipping, and showcasing it in your rented retail place, you should be rewarded.
On the other hand, underpricing means when putting the item on clearance you are paying customers to take it away.6. Failure to Stay Current
If you don’t want to discount yourself out of the market by underselling and cutting your profit margin, you should check your current costs at the vendor level regularly and update your prices on reorders when necessary. Laziness might ruin the entire business.
Wrong pricing is one of the most common (and often hidden) mistakes that can cripple a retailer.
This article originally appeared onThe Retail Doc by Bob Phibbs
Bob Phibbs, the Retail Doctor®, has helped thousands of businesses in every major industry, including hospitality, manufacturing, service, restaurant and retail. He is a nationally recognized retail expert on business strategy, customer service, sales, and marketing. With over thirty-year experience beginning in the trenches of retail and extending to senior management positions, he has been a corporate officer, franchisor and entrepreneur. His presentations are designed to provide practical information in a fun and re-memorable format, earning raving fans along the way.
Bob's aggressive, comprehensive ideas and best practices have proved successful in helping firms of all types and sizes. Bob's passion and enthusiasm are hallmarks of his presentation skills. He has consulted for, and given presentations, to some of the country's best-known retail brands, including Brother, Caswell-Massey, Hunter Douglas, LEGO, Lumber Liquidators, OMEGA, Yamaha, and Vera Bradley.