There is a common trap that many indie retailers fall into: the obsession with being the cheapest. We often convince ourselves that price is the only factor driving customers through the door. However, if your entire value proposition is based on having the lowest price, you are likely leaving significant profit on the table and making your business more vulnerable to economic shifts.
The Convenience Factor
When was the last time you truly reviewed your approach to markup? Often, retailers are so fixated on competing with national chains that they forget why people shop with them in the first place. If your shop offers easy parking right out the front, remains open longer hours, or provides a curated experience, you are selling convenience.
Think about the cinema or a local convenience store. Customers know they will pay more for candy or a soft drink in those locations than they would at a supermarket. They accept this “convenience tax” because the product is available exactly when and where they need it. As an independent retailer, your location and service levels provide similar value. Your pricing should reflect that.
Navigating Rising Costs
We are currently operating in an environment of fluctuating overheads. From fuel surcharges to rising labour and rent costs, the pressure on small businesses is constant. Many suppliers are already applying fuel surcharges to their deliveries. This provides a legitimate “cover” to explain price adjustments to your customers.
Because consumers see these rising costs on the news every day, they are generally more accepting of commercial decisions to adjust pricing. If you aren’t adjusting your markup to account for these external pressures, your business will eventually slip behind.
The Power of Incremental Changes
A successful financial model is often built on a series of small steps rather than giant leaps. You don’t need to overhaul your entire price list overnight. Instead, look for opportunities to increase margins by just a few percent in specific categories—especially in “non-essential” or gift-related items like fashion, homewares, or jewellery.
By building a better buffer into your gross profit, you become less reliant on high sales volumes or a constant stream of new customers to stay afloat.
Take Control of Your Pricing
Stop blindly accepting the Suggested Retail Price (SRP) or the defaults in your point-of-sale software. Your suppliers set those prices based on what they think a product will sell for, but they don’t know your specific local market or your unique costs.
Take the time to look at what you sell and ask: “What are my customers prepared to pay?” Even a small shift in your markup policy can create the financial resilience your business needs to thrive in the long term.