How to Find the Retail Price For a clothing store
Fri Dec 24 2021
Coffee & cornetto
When it comes to pricing a clothing store’s inventory, retailers need an effective strategy. In this article, we’ll go over how brands can find the right price for their products to grow their profits and generate loyal customers.
Retail Price Definition
What is the meaning of retail price? A retail price is the cost customers pay when buying goods at retail stores. The price retailers set for their products represents the relationship between the final price customers pay and the intermediate prices the company pays upward in the supply chain.
In simpler terms, a customer doesn’t buy a product to resell it. Instead, they buy an item to consume it.
The retail price differs from the manufacturer price and distributor price. These refer to the prices one seller from another sets in the supply chain.
On the other hand, in the retail environment, the final seller (or retailer) sets a retail price contingent upon operating costs as well as supply and demand conditions.
When setting the price, a retailer often aims to price products in a way that helps maximize profits. However, this can be a tricky task because it’s still important to make sure that the price appeals to customers, especially when trying to stand out from competitors.
What is the Markup?
Markup is important for learning how to find wholesale price from retail price. Markup shows how much more a retailer’s selling price is than the amount the item costs the company. In other words, the markup is the difference between the price a retailer sets for a product and its cost.
Markup = Selling price - Cost
Typically, the higher the markup, the higher the retailer’s profit.
Let’s look at an example. Let’s say that a product’s unit cost is $10. However, the retail price is $15. As a result, the retail markup is $5. ($15 - $10 = $5)
Retailers often express the retail markup as a percentage. To calculate this, divide retail markup by unit cost:
Retail markup / Unit cost = Retail markup percentage
Using the previous example, $5/$10 = 50%.
Setting a markup price allows retailers to easily price multiple products, without having to do so on a case-by-case basis.
Markup pricing is also a beneficial strategy for retailers because it requires less information. That’s because with markup pricing, all brands need to know is the product’s cost in regards to the operating fees.For help determining the markup price, retailers can use a markup calculator.
Manufacturer Suggested Retail Price (MSRP)
A manufacturer can suggest a retail price retailers should sell their products for. A manufacturer suggested retail price (MSRP) often reflects all the costs associated with the manufacturing and sales process.
It also takes into account the average markup by retailers. To understand the MSRP meaning, it helps to know that its main aim is to ensure all parties, including the manufacturer, wholesaler, and retailer, make a profit from the final sale.
Any product can have an MSRP. However, the most common products retailers use an MSRP for are high-ticket items like cars, electronics, and appliances.
Even though retailers don’t have to use the MSRP, doing so can make customers more willing to purchase higher-priced items.
Therefore, following an MSRP can help keep the price at the same level from store to store. Additionally, brands can sell products at a lower price than their competitors to drive more sales.
How to Find the Correct Retail Price
So, how can businesses find the correct prices for their clothing store inventory.
Add Up Operating Costs
When it comes to pricing clothing, it’s important to keep break-even low. To do this, brands need to figure out how much they’re paying to bring their product to market. Common operating costs include:
Marketing their products/services
Raw materials or ingredients
-Rent, utilities, and storage
Rent, utilities, and storage
Understand Ideal Customers
The price of a retailer’s clothing often directly relates to the value they provide customers. If the clothing a company sells features long-lasting, high-quality material, then they can reasonably price their products higher. This is especially true if their target customer is looking for a luxury clothing brand.
Find Their Value Proposition
Retails can compare the relative value their clothing brand adds to their customers compared to that of their competitors. This involves figuring out what makes their business different.
For example, a retailer might provide their customers with high-quality clothing at an affordable price. This could be something that fills a gap in the clothing market. As a result, a retailer’s lower prices could differentiate them from their competitors.
Choose an Appropriate Retail Pricing Strategy
Based on the factors that affect the pricing of products, businesses can choose the right strategy for setting the price of their clothing inventory.
Cost plus pricing
Every strong retail inventory method has a strong retail pricing strategy. And when it comes to learning how to price wholesale clothing, understanding the customer is vital.
However, the key to pricing products is to understand the customers’ needs and have a firm grasp of the competitive landscape. As a result, customers will be more willing to pay for products at the price a retailer sets.
Thanks to the width of items, Mirta allows you to have products at different prices so you can put the mark up that best suits your needs. Sign up and check our catologue!