Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Tips on calculating the best price for inventory items over which you have sale price control

Mark Fletcher
November 2nd, 2019 · 5 Comments

Setting your sale price for new inventory items is challenging. There are many factors to consider: margin, what an item will sell for, your sales volume need, the labour cost of each sale and more.

In considering what to sell something for, ask your colleagues in-store how much would you pay for this? This can be a good guide, or at least a data point to add to your thinking.

Do your research, too, and see what others nearby sell the item or similar items for. Research online too, locally and elsewhere.

Finally, consider carefully your objectives for the product – is this a volume play or a margin play?

Your pricing choice may not be as clear-cut as it would seem. For example, you could set a high price knowing that with a discount voucher on purchase the item appears to cost less. You might have volume pricing: $xx.xx for one, $yy.yy for two. You could have the item bundled with another to differentiate your offer to that of a nearby competitor and thereby offering you the opportunity to break free on pricing.

Pricing is not black and white. Indeed, it plays to your advantage if it is not black and while as this makes price comparison more difficult, which is good for you. Zee my other notes on discount vouchers and multi-buy pricing.

Think carefully about where in a price band you price an item. For example, Items priced above $7.99 could probably sell at $9.99. Items above $19.99 should either be $24.99 or $29.99 and no other number in between. Above $29.99 more often you should target $39.99.

Avoid nothing prices that can cost GP. For example: $21.95 should be $24.99; $112.50 à$119.99; $6.50 à$7.99; $8.75 à$9.99; $132.50 à$139.99; $36.50 à$39.99, and so on.

Choose to go to a higher price point rather than lower. Independent retail businesses, newsagencies especially, are expected to be more expensive. If you counter this with a consistently offered and generous discount voucher program then erring on the higher side of pricing works for you as your voucher sets value perception for your shoppers.

My recommendation is that you always end your prices with a .99 and price at above RRP. I see no value in a .00 price point. Indeed, I see that as an opportunity lost.

Here is what this post is really about: think about and determine the pricing policy you want for your specific business and establish this as a guide for your business. This can make it easier for anyone in the business faced with setting a sale price for new items. Without it, pricing will take longer. Worse, you could make mistakes


Category: Management tip · Newsagency management · Newsagency opportunities

5 responses so far ↓

  • 1 Colin // Nov 3, 2019 at 9:00 AM

    Stating in an open forum that prices should always be above RRP gives opportunity to competitors to denigrate newsagents.

    Also the world has moved on from .99

    Yesterday I came across for the first time a Kaisercraft store. Cards at 5 for $10, similarly soaps and socks. But still displaying Ty at .99 prices (as were 2 other stores in same centre).

    The cards were full face, very big prominent display. The soaps and stocks were excellently merchandise.

    Competition is far more nuanced than m a ximising .99


  • 2 Matt // Nov 3, 2019 at 9:23 AM

    Collin,if its true, supermarkets would have long moved from 0.99 pricing. They still do. so it means it is still working.
    Even if we price match and claim we are cheap, neither people’s perception would change nor can we sell the volume that supermarkets or big brands can push.
    Most times, customers buy a gift or similar item in newsagency , because simply they like it(may be they first find it here, or have heard about that product from somebody ) and make a quick decision.Not because, its the cheapest at newsagents.


  • 3 Colin // Nov 3, 2019 at 9:49 AM

    I agree with you on supermarkets and newsagents cannot hope to match them.

    But look at the real competitors. You will find an alternative world where the .99 is not always the answer.


  • 4 Mark Fletcher // Nov 3, 2019 at 9:53 AM

    This post is not about deliberately going above SRP just as it is not about nuance in pricing as hose are other topics completely.

    This post is offering suggestions on pricing where a retailer can set the pricing.

    As too Kaiserkraft. Been around for years. So has Typo and Kikki.K pricing cards in the same way.

    IMHO for single price items, .99 makes sense.


  • 5 Graeme Day // Nov 3, 2019 at 12:47 PM

    Many years ago (1984) not Orwellian or oustanding in result however very effective, a survey found that rounding off to ’98 was the best option as it is a “softer” number.
    We tried it and found the results were outstanding.


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