Pricing to Maximize Profit

Today I’m sharing a pricing strategy that most store owners don’t use.

Once you understand how it works, and start implementing it in your store, you’ll have the potential to be much more profitable.

Most importantly, you’ll have a better understanding of how to pay yourself, hire help, and make your business profitable for the long term.

Before we dive in to what how you can price your products for.

The pricing error that could put you out of business

Most people have their own system for setting their retail prices. Many store owners use a target gross margin percentage, and apply that markup to every item in their store. Others simply set their retail prices at a multiple of the cost of the product.

Even though these strategies seem solid, it doesn’t guarantee that you’ll be profitable.
It’s completely possible that you could find yourself losing money every month, because the actual profit in dollars and cents is not enough to cover your expenses.

Try a different way to calculate the selling price of your products

Instead of using a formula, try setting your prices based on Margin Contribution dollars. You decide on a minimum amount of Margin Contribution revenue your products must generate.
When each product must contribute a minimum profit in dollars, you can avoid costly pricing mistakes and meet your minimum Margin Contribution by bundling products together or even eliminating products that don’t generate enough profit.

How to make sure you get paid and have funds available to hire help

In this episode I share the sneaky little strategy that will give you the funds you need to pay yourself and be confident that you can afford to hire help.

It’s a little exercise that anyone can do. I think you’ll love it!

Even if you hate the numbers, you can do this

As store owners, we tend to focus on our products and on growing our sales. Most of us don’t spend much time analyzing our finances, and many of us are simply not comfortable when it comes to conversations about money in our businesses. I understand that, because for many years I felt that same way. One day I was finally fed up with paying late filing fees and getting financial surprises, and I decided to get on track and understand this part of the business.

It’s not nearly as hard as I thought it would be. I’ve learned that everything is fixable, and that you actually can be more profitable when you have the information you need to make good decisions.

In the episode, I mention this video and podcast episode:

Video: https://thesocialsalesgirls.com/the-secret-to-getting-paid/

Podcast Episode 43: https://thesocialsalesgirls.com/forget-everything-you-think-you-know-about-pricing-and-be-profitable-episode-43/