When organising your business you need to stay on top of one factor that dominates the priority list alongside stock levels – pricing. As many people will tell you, there’s not one single way to organise pricing across the board, as businesses, markets and product ranges vary. It’s a case of creating a strategy based off of how much products cost you to get in, then calculating a price that can gain you some profit when you sell them.
If you work with suppliers to bring in your stock, then it won’t come as a surprise that now and again there will be fluctuations, due to different deals and import pricing changes. So long as you are quick to act and update your pricing accordingly, you should have nothing to worry about, but you should always be prepared for increases in pricing – they do happen.
Sometimes rather than looking at one individual product and getting worried about making a small loss on it, you’re better looking at the bigger picture and making a slight loss on one or two items to drive sales numbers – some suppliers even offer financial rewards if you sell a certain number of one, or a range of products in a certain time period.
Let’s look at Insurance, and in particular, Motor Trade Insurance. The pricing of motor trade insurance is dictated by real statistics – such as claim rates, postcodes, risk levels, and much more. It is factual based product pricing – insurers set prices based on their perceived risk of the motor trader. Source: One Sure Insurance – Motor Trade Insurance From £45.37 Per Month!*
If you are selling products of your own design, then you’ll need to start off by aiming low, as it goes without saying – if a product has been pulled off before by what is now a larger brand, nine times out of ten people will go to them before considering a cheaper option. However, paying less for a similar product that is just as good can prove fruitful for consumers so your item may gain a lot of value and public demand if it is priced low to begin with. Then you can start creeping up the numbers – obviously not enough to put people off buying.
If you notice that there is a drop in sales for a certain product, dropping the price isn’t always the best option. Sometimes demand can rise and fall but this could be due to many reasons. Whether it be the time of year, political and financial climates outside of the commercial sector.
Overall you have to consider costs, before setting sale prices. You need to see what’s going out to figure how much you need to bring in. It’s not always about profit – sometimes making a slight loss to push sales numbers can have positive long term effects, but just don’t over-do it – it’s very easy to dig yourself into a hole that you won’t be able to recover from.