Retail: Determine your retail niche
A. Pricing in retail is an art, and there are a number of factors you must consider. What niche are you trying to fill? Are you a low-priced discounter, or are you in a higher income area where you can emphasize quality and service over price? Who are your main competitors, and how are they pricing similar products? Finally, an important consideration is your gross profit, which you want to be around 50% on the mix of all of your sales.
For the most part, I suggest doubling your cost on average (including freight) to reach the 50% gross profit. On some of your products, you may have to price lower than that to be competitive, but on others, you can more than double your cost if your market will support it.
All of your products should have price tags on them in lettering big enough for seniors to read. For the larger products, I suggest one line with the manufacturer’s suggested retail price (MSRP) and then under it “Our Price.” We go a step further and put a gold sunburst label on the price tag with “$130 off” or “36% off” to emphasize the difference.
In each category of products we designate a “sale” item that is always on sale and featured in our ads. This is usually a “good” item in the “good, better, best” comparisons and gets the customer into the store where you can try to upsell. I don’t think people usually buy medical equipment because it’s on sale, but because they’ve discovered a need for it. We offer a “low price guarantee” where we will match any other local stores’ advertised prices. We also distribute 10% discount cards to senior living centers.
Be aware that if you are also a Medicare supplier, you are limited to around a 17% discount from the Medicare allowable for a cash sale.
Michael Kuller, RPh, is the author of “The Next Step-Retail Home Medical Equipment.” He can be reached at email@example.com.