Deciding the prices of your products can be difficult. Set them to high, and risk low sales. Set them too low, and loose money. Did you know your point-of-sale (POS) system can help you make decisions about pricing?
Your POS system should be able to tell you how much you are selling of a given product over a certain day/week/month. It should also allow you to change your pricing. Here are some tips to help you set prices with your POS software.
Use Data to Find the Right Price
If you have an item that you can’t keep on your shelves, raise the price by 3-5% for a few weeks to generate more profit. Keep track of your sales with your POS software to see how the price change affects sales. If sales are unchanged, you can raise the price a bit higher. If sales have fallen but not by enough that you are losing profit, you might have found the sweet spot. If sales decreased you can always lower the price back down. Try this process on other items in your store.
Remember the perfect price is the intersection of supply and demand. Your POS software should give you the ability to find exactly where that intersection is.
Consider a Sale or Donation
Have you ever purchased a product to sell based off you opinion instead of the customer’s? If you have, chances are you probably have inventory of the item you liked, but unfortunately couldn’t sell. The reality is, that inventory is taking up space, and keeping you from making money and selling a product that your customers actually want.
The savvy business owner will liquidate this inventory, either through a clearance sale or donation to a local charity. This can provide cash to spend on new inventory, and will at least free up square footage that they can devote to new inventory that will sell.
Use your POS system to help determine what products are selling and what products are not. Only buy what you can sell to your customers. Also, use it to help you determine your sales percentages.
Don’t Discount Too Much
As a general principle it’s always easier to price high and then reduce if necessary, so give yourself wiggle room on your discounting and a fighting chance of turning a profit by being slow to offer a huge discount.
Your POS Software can get almost immediate feedback on the performance of this kind of discounting campaign. Stay close to the sales numbers for a more profitable business in the long run.
In summary, the key is to make sure you consider your data when pricing. Remember to use your POS software to help. While you may have to do some testing, to see what works with your customers, in the long run you will maximize profits and hit that sweet spot over and over again.