{"id":1154,"date":"2023-10-13T20:28:00","date_gmt":"2023-10-13T20:28:00","guid":{"rendered":"https:\/\/professionalsourcingsolutions.ca\/?p=1154"},"modified":"2023-12-11T20:33:03","modified_gmt":"2023-12-11T20:33:03","slug":"product-pricing-retail-101","status":"publish","type":"post","link":"https:\/\/professionalsourcingsolutions.ca\/product-pricing-retail-101\/","title":{"rendered":"Product Pricing: Retail 101"},"content":{"rendered":"\n
\"Retail<\/figure>\n\n\n\n

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In the world of retail, product pricing stands as the linchpin of success, merging the realms of marketing, psychology, and strategic acumen. As noted by Josh Pollack, Associate Partner and Pricing Practice Lead at the Parker Avery Group, few decisions wield as far-reaching an impact on business performance as the method employed to price items within the product assortment. This guide is a comprehensive exploration of the art of product pricing, delving into a myriad of methods, strategies for selection, and real-world examples, all designed to empower you to master the intricate craft of pricing.<\/p>\n\n\n\n

The Importance of Setting the Right Price:<\/strong><\/h2>\n\n\n\n

Product pricing is all about finding the delicate equilibrium that keeps your product competitive in the market, accurately represents its intrinsic value, preserves your profit margins, and considers all relevant costs. Ian Sells, CEO, and Founder of Rebate Key, underscores the importance of getting the price right for retail success.<\/p>\n\n\n\n

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Different Product Pricing Methods:<\/strong><\/h2>\n\n\n\n
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  1. Cost-Plus Pricing:<\/strong> Calculate production costs, including labor, materials, and overhead expenses, and then add a fixed percentage for profit. While this method is simple, it lacks insights from external research.<\/li>\n\n\n\n
  2. Value-Based Pricing:<\/strong> Determine prices based on the perceived value of your product to customers, which requires a deep understanding of customer preferences and perceptions.<\/li>\n\n\n\n
  3. Competitor-Based Pricing:<\/strong> Set your prices relative to your competitors, which is straightforward but may not be ideal for long-term strategy.<\/li>\n\n\n\n
  4. Elasticity-Based Pricing:<\/strong> Analyze the effects of price changes on sales quantity, providing valuable insights into customer responses to price fluctuations.<\/li>\n\n\n\n
  5. Cross-Product Pricing:<\/strong> Bundle complementary products together to stimulate demand.<\/li>\n\n\n\n
  6. Gross Margin-Based Pricing:<\/strong> Consider your gross margin (revenue after Cost of Goods Sold) when making pricing decisions.<\/li>\n\n\n\n
  7. Keystone Pricing:<\/strong> Price products with a 50% markup, which is simple but may lack competitive insights.<\/li>\n\n\n\n
  8. Price Skimming:<\/strong> Begin with high initial prices, progressively lowering them as demand and competition evolve, suitable for unique or pioneering products.<\/li>\n\n\n\n
  9. Penetration Pricing:<\/strong> Price your products lower than competitors to attract and expand your customer base through affordability.<\/li>\n\n\n\n
  10. Price Anchoring:<\/strong> Strategically position a less expensive product adjacent to a pricier one to guide customers toward the perceived better deal.<\/li>\n\n\n\n
  11. Bundle Pricing:<\/strong> Bundle products together and offer them at a discounted package price to entice value-conscious customers.<\/li>\n<\/ol>\n\n\n\n

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    Brick-and-Mortar vs. Ecommerce Pricing:<\/strong><\/h2>\n\n\n\n

    Adapting your pricing strategy to different sales channels is essential. Consider additional factors, such as shipping costs, when determining pricing for e-commerce and aim for a balanced approach to online and in-store pricing.<\/p>\n\n\n\n

    Selecting the Right Pricing Method:<\/strong><\/h2>\n\n\n\n