Leverage Your Price Points To Boost Your Turn Rates

Inventory management is one of the most critical pieces of running a profitable retail business.  You’ve got to move products at the right pace, and you’ve got to make sure that you have enough stock on hand to meet demand, without keeping too much money tied up in products sitting in boxes. The sooner your inventory moves, the sooner you can realize profits, since there is no profit until an item is sold.

Healthy businesses have high sales per square foot and a high stock turn rate. There are numerous factors that go into moving merchandise, but one often overlooked way to boost turn rate is to closely examine price points.

Strategies for Pricing Snack Foods

There are a number of strategies retailers can use when it comes to pricing items, especially snack foods, which can be a major driver of sales in c-stores. They include:

• Penetration pricing: For new locations or when launching new product lines, many retailers price their goods at or below industry lows. This can be a difficult strategy to maintain long-term, however, unless you have the buying power of Wal Mart. It is hard to raise prices on customers once they are used to low prices.
• Profit maximization: At the opposite end of the spectrum lies the profit maximization strategy where items are priced at industry highs to maximize profit margin. This technique is typically useful for high-end retailers or new product launches. Once a buying pattern has been established, prices can be lowered incrementally to maintain customer loyalty.
• Value-based pricing: This lies between penetration and profit maximization, pricing items at the mid-range of the market. Value-based pricing requires a lot of research to determine what customers think a “fair” price for an item is. It can go wrong if customers perceive the value to be below the cost to purchase the products.
• Cost-Based pricing: This is the “standard” pricing model, where retailers mark up goods by a certain percentage to guard gross profit on every sale. The drawback with this strategy is that it does not take into account marketing factors or value factors.

How Can You Leverage Price Points To Boost Turn Rate

There are pros and cons to every pricing strategy. Keeping prices low might attract new customers, but it might not maintain them, and it cuts into the bottom line. Pricing items too high could turn off customers. Value-based pricing can be hit or miss and cost-based pricing can be problematic when it comes time to run sales or promotions.

The key to leveraging price points is not to take a blanket approach, but to understand your market, your unique customer base, and the value of the items you sell. Large chains that can invest in price modeling software can manage pricing with a few clicks of a mouse. Independent retailers usually have to put in a little more work.

This is where the right vendor partners come into play. Strong snack food vendors can help you develop a pricing strategy for their products that will protect margins while driving sales and keeping your turn rate where it needs to be to ensure overall profitability.

Partner with Mister Snacks

Mister Snacks understands how pricing can impact turn rate.  We work with grocery stores, C-stores and specialty shops to ensure that shelves are stocked with high-margin, fast-selling snack foods  that speak to the needs of each location’s unique customer base, and we can help you estimate your retail pricing strategy for best results. Contact us today to learn more about how we can help you leverage price points to boost turn rates.