It's your store. Would you rather:
- a). sell one thing-a-ma-bob for $29.99 (and net $10 on it)
- b). sell two thing-a-ma-bobs for $24.49 each (and net $9 on the two of them)
- or c). sell eight of these thing-a-ma-bobs for $20.99 each (and net $8 of the lot of them)?
Of course the obvious answer is "a" – for a variety of reasons. After all, $10 is more than either $9 or $8. It takes less sales staff to sell one of something than it does to sell eight of them. And your profit margin is considerably larger with "a" than with "c."
Unfortunately, it's not always up to you… If your competition is selling the same make and model of thingys for $25, you may have to go to the $24.49 price to draw in customers. If the item is a necessity (in the toilet paper and coffee category of things that personally, I just gotta have), $24.49 may do the trick.
All of what we've said so far works in good times. But these are bad times.
Seth Godin had a nice piece of consumer psychology on his blog last week to help keep you from being stuck with your inventory and, at the same time, get the most you can out of it in the sales process. The trick is to enable your sales people to get the $29.99 from anyone who'll still pay it, but lower the price to $20.99 when they just have to in order to make a sale.
Seth gives a good description of just how to do that…
Photo courtesy of iStockphoto, Paul Velgos