Pricing

Once you have set up most of the fundamentals of your business and made an account with your vendors (manufacturers and distributors), it's time to come up with your pricing for the merchandise you will be selling. You must figure how much above your purchase price, or cost, you will charge your customers. There's no set formula on how to price your merchandise. How you price you merchandise should depend on certain things including how readily available the item is elsewhere, how quickly it sells, and your own individual goals.

Some stores sell certain items at cost, called a leader, while others may even sell something at a loss in order to get the sales on accompanying products. For example a pet store may sell a birdcage at cost in order to get you to buy the bird. Or a cell phone store will sell you a phone below cost or free to get you to buy the phone service. If you price your items too high, you may not get sales because people can find it cheaper elsewhere. If you price them too low, you may sell a lot of them, but make very little profit..

So what's the magic number? There is no one number or percentage. Some B&Ms mark their items up 50-100% or more, but that's difficult to get away with online. Many people comparison shop online against the price at their local store. Ideally you want to be less expensive to make up for the fact that they will have to wait to have it delivered. Your lower price can outweigh the immediate gratification of the person buying it and having it in their hand right away. You may also want to start out with lower prices initially to get a customer base. Many new businesses start out not making a profit for a few years until they get enough regular customers.