Vendor Pricing

Manufacturer Suggested Retail Price (MSRP) is one of the commonest strategies that is utilized by small retail stores to keep away from price wars and still get a reasonable profit. Some dealers have a minimum advertised price but also propose a retail price. By pricing a product with the proposed retail supplied by the supplier, the retail seller does not come into the picture at all. Another concern with utilizing pre-determined prices is that there is no advantage over the competition by the retail seller.

Competitive Pricing

There are many choices for the consumer and most of them are ready to shop around so that the can get the best price. Retail sellers who consider a strategy of competitive pricing should be willing to offer outstanding customer service in order to overcome the competition.

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Pricing below competition is nothing but pricing the merchandise below the price offered by the competitor. This is a well working strategy provided the retail seller has negotiated the best cost prices, reduced costs and develops a strategy of marketing that focuses on price specials.

Prestige pricing or pricing above the competition can be thought of when there is justification for higher prices in terms of locality, individuality and/or exclusive customer service. Retail sellers who stock high-quality material that is not obtainable at any other place may turn out to have a successful business even if they price their products above those of their competitors.

Psychological Pricing

Psychological pricing is resorted to when the prices are marked up to a particular level that a consumer considers to be fair. The most common way is odd-pricing. Figures that end in an odd number such as 5, 7 or 9 are used. It is assumed that consumers have the tendency to round off a price of $9.95 to $9.00 rather than $10.00.

Other Strategies Of Pricing

Keystone pricing is not now in use as it once was. Doubling the amount paid for products was at a time the rule of pricing merchandise, but nowadays few products allow keystone pricing.

Multiple pricing is a technique of marketing more than one item for one single price like 3 items for one dollar. This strategy is not only good for sales events and markdowns, but retail sellers have found that customers have the tendency to buy in large quantities where the strategy of multiple pricing is employed.

Discount pricing
and reductions in price are an accepted practice in retail selling. Discounting cls include seasonal prices, rebates, coupons and other promotional markdowns.

Products priced below their cost price are known as loss leaders. Though retail sells get no profit by selling these discounted material, the retailers hope that customers will buy other items with a higher profit margin on their visit to the shop.

As you go on developing the model that best suits you in your pricing strategy for your business, know that the ideal strategy for pricing depends on factors more than just cost. It also depends on practices of good pricing.

It is rather hard to specify as to which part of pricing is more vital than the next. Just remember that the right price is one that the customer is willing to pay at the same time giving the retail seller a decent profit.

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Filed under: Fashion & Accessories

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