How to determine the retail price of goods

The formation of retail prices is an important stage of entrepreneurial activity. It is on competent pricing that conception is based on the profitability of a trading company. To determine the retail price of the goods, it is advisable to use several methods that complement each other.

You will need

• - competitor price analysis;

• - cost accounting.

Instruction manual

1

Analyze the retail price of similar products in your category. Carefully compare the products on the market. One and the same name may differ significantly upon closer examination, which, of course, will affect the final price. Also take into account the brand’s fame: widely-advertised products tend to stand far above the less common products.

2

Form a price based on the variable and fixed costs of selling the product. Determine what costs are incurred per unit of output. At the same time, consider not only the direct costs of delivery, storage and sale. Do not forget about fixed costs such as taxes, electricity, payroll, etc. The retail price of the product should cover all these costs and at the same time provide a certain level of profitability.

3

When it comes to rare or exclusive products, retail pricing depends more on your entrepreneurial intuition. For example, the margin for exotic fruits or handmade jewelry can be 800-1000%. However, most buyers are probably aware that the cost of purchased goods can be an order of magnitude lower. That is why many people easily pay $ 10 for mangoes, knowing that in any South Asian country this fruit can be bought for $ 1.

4

When pricing a new product, use the “skim cream” strategy. A progressive model of a mobile phone, an innovative cream, the latest designer collection - products of similar categories at the stage of launching to the market always cost more. Consider this fact in order to be able to gradually reduce the price when a lot of similar products appear around.

5

Form the retail price taking into account subsequent discounts. This technique also has a psychological effect on the buyer. Set in advance a knowingly high cost. And after a few weeks, arrange a sale, while still remaining within the framework of profitability. At the same time, a significant reduction in prices will attract customers and increase sales.