Price Ranges Help Your Customers to Buy

Published: Jun 30, 2004

Application

Prices on your merchandise for sale are not determined by an exact application of your markup factor. The markup factor determines in which price range the tag price will fall.

Customers can be confused when comparing commodities at different price levels. Confusion in the mind of the consumer will disturb the prospective buyer enough to prevent a sale. Therefore, give your customer a clearer choice for making comparisons.

Processing Steps

Set appropriate price ranges for each category of merchandise.
Calculate the markup to obtain the exact proceeds desired.
Place within its price range.
Determine to price at the lower or higher end of the range depending on appeal, competition or by your own decision criteria.
You and your staff prepare to explain the relative value in the rise to the next price range.

Example:

Price ranges are: 0 to 9.99, 10.00 to 14.99, 15.00 to 19.99 and so on.

Markup rate is 40%

Item A cost is $ 8.60	Exact price is $8.60 x 1.4 = 12.04	Tag Price is $14.95
Item B cost is $ 11.07	Exact price is $11.07 x 1.4 = 15.50	Tag Price is $14.95 or $19.95

Stories

$1.44 Day

I'm not sure if my leg was being pulled or not. During an interview with a manager who was preparing for an upcoming $1.44 Day sales event, I picked up an item marked $1.44 that seemed like a good bargain. I asked, "What does this regularly sell for?" He replied, "$1.39" Truthful or not, a lesson on Promotion was learned.

Submitted by: NephewGerry

Outcomes

Increased sales with consumer friendly pricing.
Efficient pricing for incoming merchandise.