How do I set my retail prices?
2011/10/27 5:00 AM
Dear Sarah,
I have a quick question…can you explain why I would want my retail price to be equal to, or greater than, the stores I want to sell to?
Thank you for all of your help,
Kimberly Mastropietro, Look & Feel Fabulous, www.justworkedout.com
Dear Kimberly,
This is a great question. Let’s set the first rule straight – never sell on-line for more than your stores are selling the item for. The main reason you want your own retail prices to be competitive with stores is so they don’t feel you are competing with them. Stores don’t really like the idea that their vendors sell on line as they view it as tough competition. Most stores still live in the “old days” mentality when there was no internet pressure to have the best price. These days, most savvy shoppers will do a quick price comparison prior to making a purchase – there are Apps for this too! This can be very hard for smaller stores to stay on top of and can cause some discomfort for them.
If you get resistance from stores because you sell on-line, you can always reassure them by reminding them that you sell at your suggested retail, but with additional shipping charges, your price is often more than what they sell it for in their store.
Good luck with your business!
When in doubt, take the next step,
xoxoxo
Sarah
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There are 5 comments
Julie says: Hi Sarah!
My sales rep is an old pro at the Retail Market. he taught me to mark my wholesale price at 5 x my cost of an item. This would help cover shipping, advertising, and other expenses. Most stores like to mark up wholesale prices 50%. This may sound high, but that’s what happens!
HTH, Julie
Ann Davis says: Dear Sarah,
I just read your response about pricing our goods at retail. I respectfully could not disagree more. I say always sell online at a higher price than your retailers. As a wholesaler selling at retail, we walk a very fine line when it comes to competing with the stores with whom we’ve built or are building strong working relationships. I would think that pricing the item higher than a “keystoned-retail price” not only gives our retail stores a chance to get full retail markup but allows them to show their local customers that they offer a good deal and should shop with them. If I set a retail price of $25 on an item that has a $10 wholesale, my retailer has the opportunity to price it at $20 for a full mark-up and brag to their customers about their great value. On the other hand, they can also choose to price the product right along with me at $25 and actually get more than a 50% discount. It also allows them to offer a special of maybe 20% off and recoupe their full wholesale price. They can’t accuse me of being too much competition. Does that make sense? Where am I missing the boat on your answer? P.S. I love reading Entreprenette! Not trying to be combative….just truly wondering where I’m off base in my thinking.
Sienna says: Ann Davis: I totally agree with you as well. This way retailers can carry a product without feeling the brand is themselves a competitor. Especially as brick and mortar stores have a much higher overhead than etailers. It entices shoppers to stay local as well.
QUESTION FOR SARAH!
What if I only sell retail, NOT wholesale?
how does the equation comes into effect in that case?
And I got the feedback form a local boutique where I live, about my prices and she said my children/baby tees should not go over $30.
I am a little afraid of asking to much money for my products, is there such a thing? I do want to be profitable My current cost is about $13
tks so much
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Do you know how to set the right price for your product line? Lordy knows I sure didn’t when I first started my handbag line. But once I learned the correct way to do it, I never mispriced anything again! Now I want to share this method with you so you can be profitable and not wonder why you can’t pay yourself.
It took me years to figure out how to set the right price for my product line when I first started out, so I can imagine you might be in the same situation. If you are not sure if you are making any money, then there is a good chance you’re not pricing your products correctly.
Proper costing is the lifeline to your business and profitability. Taking into consideration and finding all the hidden costs, is the key. So many people forget little things that they add up and then BOOM, you are not making any money. Once you have the actual cost (cost of goods sold) then it is easy to figure out the wholesale and retail prices so you are always making money.
I’d love to share this formula with you. It totally saved my rear when I was in year 3….. Just thinking of all that lost money in the first 2 years…. I want to cry!
Drop me a comment with “PRICED FOR PROFIT” and I’ll reach out and connect with you.
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