If you work in a Charity retail business how often have you heard someone say, ‘how much do you think I should put on this’.
If you’re a charity shop customer how often have you said even to yourself ‘that’s a bargain’ or ‘I cannot believe how expensive this is’
Of course it is frequently
There is no doubt that pricing of donations within a charity retail business is a skill and it affects not only the sales in the Charity Shop but its brand image and reputation.
Just imagine if a charity shop makes Five less under-pricing errors a day over 6 days a week with each being a conservative under-pricing error of £2. There would be additional sales of £3,120 per year per shop.
The simple question is how much is every 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. A reasonable time is around 14 days, and this is a cornerstone of most successful charity retail pricing strategies.
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 rotation and brand reputation.
The Goldilocks Pricing 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 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. With Clothing and Accessories being the highest percentage of Charity Retail sales it is the perfect place to start.
Anything that can be done to eliminate the guesswork will help to drive your prices toward that ‘goldilocks’ zone.
Pricing effectively for Clothing and Accessories in charity retail means knowing your brands. We tend to categorise brands in one of four categories:
- Top end High Street
- 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, and this is a cornerstone in the development of a good pricing strategy.
Our industry-leading Brand Directory lists and categories more than 700 brands, in this way. If you already have one with this depth written by a charity retail expert, then great, if not then you should either purchase one or develop one. The clarity provided by a brand directory will help you optimise your pricing strategy consistently across every individual outlet.
Accounting for Every Variable
Price differentiation can alter your customer’s perception of your store and bolster your reputation for quality and for value. By tweaking prices according to your store’s target market, you can further refine the overall price strategy.
Not all shop formats are the same. Yours will probably fit into the following categories: bargain or value outlet, community shop ,traditional store, specialist, or a boutique store offering higher-value, rare items.
Location also matter’s: what’s appropriate in a city centre might not be so in a market town or small community shopping area. Your pricing strategy should reflect your target market and local demographics and be based on an informed profile of a typical customer.
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 so much rotation.
Products can be effectively reduced within a targeted 2-week window, with the ideal being your items should be sold within 14 days. If they don’t do this the merchandising might not be right or is the price might not being right.
Once The cornerstones are in place there are 3 key ongoing actions.
The shop teams need to be trained, in the Goldilocks Pricing Principle, the best practice merchandising techniques and how to review the throughput and average ticket prices.
Once the cornerstones are in place and the training is complete it empowers the charity retail team of both paid staff and volunteers, to deliver better sales performance in the long-term.
Charity Retail Training & Support Services are part of Skyline Business Services. We are a UK registered training provider and the leading Charity Retail experts within the UK. We can supply the ultimate Brand Directory, Training, and a full range of support services to help charities develop a successful pricing strategy.