Get out of the race to the bottom with strategy.
Some products have your customers on high alert
People instinctively check the prices on some items. They’re on high alert. It may be 2×4 lumber, it may be 30yr shingles or even 14/2 interior wire. These items are repeatedly shopped around local stores and compared. If they find a lower price somewhere, they will move their business without a second thought.
You need to be on the ball with these prices. A low price can bring in the masses, a high price can drive away long time customers. You can really move the needle here, by being relevant.
Other products are purchased without a second look
For whatever reason, people have a very low alert level with other products. It could be something like nails, fittings or tarp. As long as these items aren’t priced too far out, people will just pay whatever the price is.
You could ignore these products, but there’s an opportunity here. By pricing some of these products slightly higher than the competition, you can increase your profits while retaining customers. With a little bit of digging and relevant market information, you’ll be off to the races.
How to retain more customers (and profit) with relevant pricing
People want to know they’re getting the best price on high alert items and they’re getting a reasonable price on everything else.
- Figure out which items are high alert and what is “everything else”. For example: a framer would be highly sensitive to the price of some dimensional lumber, but probably not as sensitive to rolled insulation.
- Get a market report on your local market pricing (get a free local market report from Product Sonar).
- For high alert products, read off your market report and price as close to your competition as you can. This gets customers to come into your store and maybe earns you a few bucks. Your customer sees you as a relevant contender in the marketplace.
- For low alert products, read off your market report and price at or slightly above your competition. This is where you can make your profit and your customer is happy because you have a relevant price.
How to stay relevant
Once you’ve set up your pricing, you’re good to go… until your competition changes their prices yet again. But we can keep beating them at this game.
- Ideally every week, you’re going to pull a local market pricing report to see how you’re doing (you can get this with a Product Sonar subscription).
- Take your pricing report and check your high alert products. Adjust your prices using the strategy we already talked about.
- Take your pricing report and check your low alert products. Adjust your margins.
At Product Sonar, we make it really easy to do this stuff. You can set up an account with one call, we know your pricing, we factor in your strategy and only tell you about the prices that need adjusting.