Sales Strategy

Mastering Retail Pricing: 15 Strategies to Drive Sales May 10, 2023 (0 comments)

Montreal, Canada--Retail pricing is critical in determining profit margins and customer acquisition. Retailers can develop a better pricing strategy by understanding the difference between one-time and repeat purchases, according to POS company, Lightspeed. 

[Image via Creative Commons]

A pool table requires a higher price to cover acquisition costs as a one-time purchase. In contrast, a protein bar, a repeat purchase, can be priced lower with long-term customer value in mind, the company says in an article on its website.

To optimize pricing, retailers should classify products as "traffic drivers" or "margin enhancers." While traffic drivers require strategic pricing and promotions to increase sales, margin enhancers can be priced more flexibly for improved profitability.

According to Lightspeed, Retailers can explore pricing approaches, such as cost-based, competition-based, and product-range pricing. Wholesale pricing differs from retail pricing, considering additional overheads, customer volumes, and distribution setups.

According to Lightspeed, the 15 retail pricing strategies include the following:

1. Manufacturer Suggested Retail Price (MSRP)

2. Markup Pricing

3. Keystone Pricing

4. Price Skimming

5. Economy Pricing

6. Multiple and Discount Pricing

7. Penetration Pricing

8. Value Pricing

9. Loss Leader Pricing

10. Competitive Pricing

11. Psychological Pricing

12. Luxury and Premium Pricing

13. Bundle Pricing

14. Anchor Pricing

15. Dynamic Pricing

To lower prices, retailers should plan promotions carefully and tailor discounts to specific customer segments. Retailers can identify shopping habits and price sensitivities by creating customer profiles and using customer management systems. Timing discounts and offers will also improve conversion rates.

Offering exclusive discounts to select consumer groups, such as students or military personnel, can attract loyal customers without hurting overall brand perception. The right pricing strategy depends on competitive positioning, customer response, financial targets, and market differences.

Retailers must combine various pricing tactics and continually experiment to find the most effective product and business strategy.

Learn more in the full article published by Lightspeed here.