RETAIL PRICING

Retail Price

• The price of a good or product when it is sold to the end user for consumption, not for resale through a third-party distribution channel.

Factors Affecting Retail Price Strategy

• Consumers
• Government
• Manufacturer, suppliers, wholesalers
• Current and potential competitors

Price Elasticity of Demand

• The sensitivity of customers to price changes in terms of the quantities they will buy:

~Elastic – Small percentage changes in price lead to substantial percentage        changes in the number of units bought.

~Inelastic – Large percentage changes in price lead to small percentage changes in the number of units bought.


Competition and Retail Pricing

~ Market pricing – Retailers often price similarly to each other and have less control over price because consumers can easily shop around.

~ Administered pricing – Firms seek to attract consumers on the basis of distinctive retailing mixes

Price Strategy

•Demand-oriented pricing

•Cost-oriented pricing

•Competition-oriented pricing

Markup Pricing Calculation

Markup percentage         Retail Selling Price- Merchandise Cost

  (at retail)                  =                  Retail Selling Price

                                 OR

Markup percentage              Planned Retail Operating Expenses + Planned Profit

  (at retail)                   =                            Planned Net Sales

Initial and Maintained  Markup Calculation

Initial Markup             Planned Retail Operating Expenses + Planned Profit Percentage                             +Planned Retail Reductions                  

Reduction              =                  Planned Net Sales +  Planned Retail

  (at Retail)

Maintained Markup       Actual Retail Operating Expenses + Actual Profit

Percentage                  =                          Actual Net Sales

  (at Retail)

References

http://www.businessdictionary.com/definition/retail-price.html

https://www.entrepreneur.com/article/193986

http://www.bizmove.com/marketing/m2y3.htm