Southern Jewelry News
  • Featured
    • All
    • Featured
    • Featured Retailers
    • Retailer Roundtable
    • Sponsored Content
    • Supplier Spotlight
    Lambrecht’s Jewelers, 130-years-old and counting
    Celebrate with Gold®
    Tracing Diamond’s Origin
    Pickens, Inc.: Steady pace wins the race
  • Latest News
    • All
    • COVID-19
    • Furry Friends
    • Industry Awards
    • Industry Events
    • NRF
    • On The Move
    • Other News
    • Tradeshow News
    • Video
    • What's New
    VAHAN launches 2022 campaign – “A Moment for Me”
    FDIC Economist, Dr. LaVaughn Henry to keynote 2022 ASA International Conference
    Michelle Meltesen joins John Atencio Wholesale team
    Kovel Collection introduces Busy Bee designs
  • Podcast
  • Columnists
    Motivating your sales staff
    Keys to Effective Communication – Part IV
    The Retailer’s Perspective: With great power comes great fails
    The Retailer’s Perspective
    The Story Behind the Stone: Yearning for Kazakhstan
    10 Cybersecurity Questions small and medium businesses should ask in 2022
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part III
    Kate’s star-studded style. What will the next trend be?
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part II
    Retailing in a post-PC world
  • Classifieds
  • Subscriptions
    • Newsletter Signup
    • Print Subscription
No Result
View All Result
Southern Jewelry News
  • Featured
    • All
    • Featured
    • Featured Retailers
    • Retailer Roundtable
    • Sponsored Content
    • Supplier Spotlight
    Lambrecht’s Jewelers, 130-years-old and counting
    Celebrate with Gold®
    Tracing Diamond’s Origin
    Pickens, Inc.: Steady pace wins the race
  • Latest News
    • All
    • COVID-19
    • Furry Friends
    • Industry Awards
    • Industry Events
    • NRF
    • On The Move
    • Other News
    • Tradeshow News
    • Video
    • What's New
    VAHAN launches 2022 campaign – “A Moment for Me”
    FDIC Economist, Dr. LaVaughn Henry to keynote 2022 ASA International Conference
    Michelle Meltesen joins John Atencio Wholesale team
    Kovel Collection introduces Busy Bee designs
  • Podcast
  • Columnists
    Motivating your sales staff
    Keys to Effective Communication – Part IV
    The Retailer’s Perspective: With great power comes great fails
    The Retailer’s Perspective
    The Story Behind the Stone: Yearning for Kazakhstan
    10 Cybersecurity Questions small and medium businesses should ask in 2022
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part III
    Kate’s star-studded style. What will the next trend be?
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part II
    Retailing in a post-PC world
  • Classifieds
  • Subscriptions
    • Newsletter Signup
    • Print Subscription
No Result
View All Result
Southern Jewelry News
No Result
View All Result
Home Columnists

When did you last review your prices?

David Brown by David Brown
December 31, 2015
Share on FacebookShare on Twitter

When we talk to clients about the key performance areas of any businesses profitability we generally come down to four factors that need to be measured and monitored closely: stockturn, quantity of sales, margins and average retail. There are many factors that can affect these four areas, but if there is any area of a business that is the quickest and easiest to adjust in order to improve the bottom line it would be price. It would also be the area of business that store owners have the most reservations about changing.

Increasing your prices has a double benefit as it not only helps raise average retail but it immediately lifts your margin or gross profit on the item sold. Given there is little or no extra cost involved in selling an item when the price is increased then each extra dollar of sales will generally turn into an extra dollar of profit on the bottom line. The effect of this can be huge.

If you work on 100% mark up and sell an item which costs you $50 for $100 then your profit is $50. An increase of 10% in your selling price on the same item will result in $60 profit on this item. On a $50 cost price this mark up has increased by 20%.

Take this through to the bottom line after expenses. If after allowing for rent, wages, etc. this business generally makes $10 or 10% profit for every $100 of sales, then they have just added another $10 to their bottom line profit – they have doubled their profitability from a 10% increase in sales.

Now this is simplistic, but it illustrates the point. This business would have to lose a lot of customers from a 10% price increase in order to be worse off from raising their prices by 10%. If they lost 10% of their customers they would still be better off from the increase.

The secret is knowing what price increase will reach the level of resistance – the point where a further increase becomes detrimental to the business and more customers are lost than the extra revenue can cover, and this can be the hard part.

I would argue however that few businesses ever reach this point – because they encounter their own mental preconceptions long before they ever reach their customers’ barriers.

Many store owners have an issue around increasing their prices – far more than their customers ever do and this comes back to our own deep seated views on money. If we increase our prices we are fearful of being called “greedy” or accused of “ripping people off,” that we aren’t doing “an honest day’s work for an honest day’s pay.” These preconceptions are not based on reality. When I ask most store owners why anyone should shop with them I get answers like “we offer the best service” yet despite telling me this these same store owners won’t charge enough for their services because they “don’t want to rip anybody off.”

Where is the value in that? 

Many store owners use a “cost plus” mentality on the prices they set, yet take no account of the extra value that is provided between receiving the goods instore and on-selling them to the customer. By not adding in the extra value they are making the same offer to the customer as the competitor who sells them the same item at the same price. These stores don’t believe their own value proposition and are not prepared to back it up.

Building your wealth and income is not a dirty word. The more value you provide people the wealthier you will become – and you will deserve it. If you don’t want to increase your prices it may be because deep down you don’t feel you have any extra value to offer the customer. If that’s the case then look at how you can bring more value to the marketplace so you can charge more for it.

If you spend more time working on your value proposition and less worrying about your competitors’ pricing you will move your business forward far quicker.

David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact inquiries@edgeretailacademy.com or call 877-569-8657.

David Brown

David Brown

David is the President of The Edge Retail Academy (sister company of The Edge). They provide expert consulting services to help with all facets of business including inventory management, staffing, sales techniques, financial growth, retirement planning, etc. – all custom-tailored to your store’s needs. Utilize the power of The Edge, to analyze major Key Performance Indicators that point to your store’s current challenges and future opportunities.  Edge Pulse is the ideal add-on to the Edge, to better understand critical sales and inventory data to improve business profitability.  It benchmarks your store against 1100+ other Edge Users to ensure you stay on top of market trends. For more information call 877-569-8657, ext. 1,  e-mail Inquiries@EdgeRetailAcademy.com  or  visit www.edgeretailacademy.com.

Related Posts

Motivating your sales staff

Keys to Effective Communication – Part IV

July 6, 2022
The Retailer’s Perspective: With great power comes great fails

The Retailer’s Perspective

June 30, 2022

The Story Behind the Stone: Yearning for Kazakhstan

June 30, 2022

10 Cybersecurity Questions small and medium businesses should ask in 2022

June 27, 2022

Latest News

What's New

VAHAN launches 2022 campaign – “A Moment for Me”

July 6, 2022
Columnists

Keys to Effective Communication – Part IV

July 6, 2022
Industry Events

FDIC Economist, Dr. LaVaughn Henry to keynote 2022 ASA International Conference

July 6, 2022

Other News

Michelle Meltesen joins John Atencio Wholesale team

Kovel Collection introduces Busy Bee designs

GN Diamond shares jewelers’ creative marketing tips

Stuller introduces several new offerings at JCK Las Vegas

JSA reports crimes against U.S. jewelry firms in 2021 exceeded pre-Covid levels

GCAL partners with VDB to add 8X® Cut Grade search filter

Southern Jewelry News

© 2022 Southern Jewelry News.

Additional Information

  • About
  • 2022 Trade Shows
  • Media Kit
  • Contact

Get Social with Us

No Result
View All Result
  • Featured Articles
    • Featured
    • Featured Retailers
    • Retailer Roundtable
    • Supplier Spotlight
    • Sponsored Content
  • Latest News
    • What’s New
    • Industry Events
    • Tradeshow News
    • On The Move
    • Other News
    • Furry Friends
  • Columnists
  • Classifieds
  • Subscriptions
    • Newsletter Signup
    • Print Subscription

© 2022 Southern Jewelry News.