Charity retail businesses spend a lot of time pondering a simple question:
How much is this item worth?
It’s a question with a simple answer: the right price for any given product is the most a customer will pay for it within a reasonable time. We can’t ever predict with certainty how our customers will think and behave. But by making a reasonable guess, we can push our pricing strategy in the right direction.
Pricing strategy is a hugely important aspect of retailing, and especially in charity retailing. Get it right and you’ll see huge differences in sales performance, as well as knock-on benefits in sorting and replenishment.
The Goldilocks Principle
The right price strikes a perfect balance. Set a low price and you’ll sell in greater volumes. Set a high one and you’ll sell less but make more on each sale. The ‘just right’ price strikes a balance between these two, resulting in the highest possible overall profit.
In charity retail, we aren’t selling just one item: we’re selling hundreds or even thousands of unique ones, each in slightly different condition. Moreover, there are time pressures to deal with. It’s important, then, to look at where the biggest mistakes are being made.
Anything that can be done to eliminate the guesswork will help to drive your prices toward that ‘goldilocks’ zone.
Pricing effectively in charity retail means knowing your brands. We tend to categorise brands in one of four categories:
Top end High Street
These categories help us to make pricing decisions quickly while avoiding big mistakes. While it might be nice to appreciate the differences in value between products in the same category, it’s essential that we don’t price a designer product as we would a value one.
With the help of the right reference material, anyone can make these distinctions.
Our industry-leading Brand Directory lists more than 700 brands, each categorised in this way. The clarity provided by this document will help optimise your pricing structure consistently across every individual outlet. In conjunction with our training sessions, this is a tool that will empower your team, including both paid staff and volunteers, to deliver better sales performance in the long-term.
Our training will educate your team to get the most from the brand directory, and to understand the power of pricing. It can be provided in several ways:
Classroom sessions are high-energy, fun, and interactive. They take place a safe environment that encourages honesty and removes the defensive thinking that can form a barrier to understanding. Learning in this environment comes from multiple sources, including in-store photos, playback, hands-on activities, and discussion.
From 2015 to 2020, our clients have consistently rated our classroom sessions as outstanding. They’ll help your team to price donations with confidence!
Our on-site training helps us to apply what we’ve learned to the real world. We’ll review in-store prices as part of a discussion of the wider pricing strategy, while accounting for local demographics and competition. In this way, we’ll show how much value the right pricing strategy can add to your business, every day.
Our brand directory is an invaluable tool for in-store staff. It’s free for clients who’ve invested in training, but it can also be purchased separately.
Accounting for Every Variable
Price differentiation can alter your customer’s perception of your store and bolster your reputation for quality or for value. By tweaking prices according to your store’s target market, we can further refine the overall price structure.
Not all shop formats are the same. Yours will probably fit into the following categories; a bargain/value outlet, a community shop ,traditional store, specialist or a boutique store offering higher-value, rare items. Location also matters: what’s appropriate in a city centre might not be so in a market town.
Your pricing strategy should reflect your target market and local demographics, and be based on an informed profile of a typical customer. We’ll help you to identify the format that’s right for each location, and make the process simple and intuitive for branch managers and their teams.
Stock Management and Rotation
The right pricing strategy, as well as maximising profit, can also lead to indirect benefits. It can make the stock management process more efficient, while reducing the need for rotation.
Products can be effectively reduced within a targeted 2-week window. This will reduce handling costs, as stock can be processed and merchandised just once. Aside from anything else, this will provide your teams with greater job satisfaction!
We would like to take this opportunity to say thank you for the amazing work carried out by the Charity Retail Association; not just at this difficult time, but day in and day out. Their leadership, guidance and support helps to bring to life the vision of a successful charity retail sector in the UK. As a corporate member, we’re incredibly proud to work alongside the Charity Retail Association as an advisory body and highly recommend all charity retailers to join this informative and knowledgeable community, which strives everyday to be The Voice of Charity Retail.
Get In Touch
Charity Retail Training & Support Services 78 York Street London W1H 1DP