How to Determine The Price For Your Retail Products
Our retail price calculator is designed to be simple and easy to use. It covers:
- your costs
- target gross margin
- sales tax inclusion - check your state sales tax here
It also provides you with gross profit (in dollars).
What Is A Good Markup Percentage For My Retail Products?
For your retail business, there is no hard or fast rule for pricing your product. However, most retailers use a markup percentage of around 50% or higher.
Sometimes, you may need to sell a product at a lower markup if you feel you cannot sell the item.
We hope this calculator helps you make more money for your retail business.
Please input below:
How To Price Your Retail Products
One of the most challenging aspects to starting a retail business is determining how much to charge for your retail products.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your retail products, it's critical that you first identify all of your costs and consequently mark up your retail products so you can factor in a profit.
The actual cost of your retail products may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your retail products, you'll want to create goals for revenue + how much profit you want your retail business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your retail products is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your retail products fits best in the marketplace.
All of these factors play an equal part in pricing your retail products, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
More Tips On Pricing Your Retail Products
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Examples of a successful retail business
Station 16 ($1.8M/year)
Adam Vieira from Montreal, Quebec, Canada started Station 16 almost 8 years ago, a art gallery.
- Revenue: $150,000/ month
- Founders: 3
- Employees: 6
- Location: Montreal, Quebec, Canada
Hi, my name is Adam Vieira, and I’m the creative director for Station 16 Gallery, a contemporary art gallery in Montreal heavily influenced by graffiti and street art.
We showcase original art, sculptures, and works on paper, which changes every month, sometimes every week. We also launch a new limited edition silkscreen print every month with international artists.
Innerglow Art ($51.6K/year)
Sarah Hickey from Plano, Texas, USA started Innerglow Art almost 5 years ago, a art business.
- Revenue: $4,300/ month
- Founders: 1
- Employees: 0
- Location: Plano, Texas, USA
I’m Sarah, an artist from Plano Texas and living out my life long dream of being an artist. I am a stay at home mom to two; my oldest Elijah is 17 months and youngest Skyla is 4 months old. My husband is also an entrepreneur, so our schedules are pretty flexible and our children get to grow up seeing us both pursue our passions.
I started Innerglow Art about 3 years ago. I specialize in painting custom abstract paintings for people’s homes. While most artists avoid the route of commissioned paintings, I truly thrive at the connection of meeting people in their homes and painting a meaningful piece for them.
I feel like this sets me apart from other artists. I incorporate my abstract style with the color combinations to match someone’s home decor to a size that’s perfect for their space. I work closely with them for a few weeks to come up with a painting that’s truly unique for them. My paintings are also inspired by scripture and feel that there is a connection between the word of God and the movement and energy that is expressed through my paintings.
Thanks for reading. We wish you success in your business endeavors.
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