Tuesday, August 26, 2014

Pricing Items in Your Booth - The TIPPING POINT

There are too many TALENTED and CREATIVE vendors with poor sales because they struggle with pricing.

The basic rule of thumb is deceptively simple - price items mid-range for your AREA and don't get near the "tipping points". 

What do I mean by tipping point?  That's just a phrase I use when talking about the price of  things.  If a customer is looking for a coffee table and they see one they really like, they will buy it if it's WITHIN REASON.  They will buy it if it's $100.  They will buy it if it's $200. Anywhere within reason is okay if they like it. That same customer probably won't even consider it for $300 and they'll be wary of it if it's too low.  Stay safely between the tipping points - not too high, not too low.

Also, notice I said things should be priced within reason for your AREA, not your mall.  If you price a dresser at $700 and  there are 10 other stores nearby that have dressers that look almost the same for $300, then a customer would have to be crazy or slap-happy-rich to want to buy yours.  Why is yours so much higher?  Is it really that much more special?  Are you sure?  Have you looked around at all the other stores nearby?  If you haven't, what are you thinking?  It's important!  If you seriously want to improve your sales, it's something you need to do.  You need to know what your customers could get if they looked around.

Over the years I have watched many vendors set a price that's over the tipping point (usually because they paid too much for it themselves) and sit on it for ages.  In fact, they may hardly sell a thing month after month.  Yet they are still paying rent.  If they had priced their items within reason, they'd likely have sales.  It's better to make a little less and have some sales than to sell a $1000 piece every 6 months.  Think about the rent paid for a six month period.  If you aren't selling anything, then you need to do something different!

The tipping point can go in the other direction, too.  You don't want to price too low. That's suspicious.  Many customers are wary of items priced too low.  They think it might be a piece of junk. There might be something wrong with it that's not stated on the tag.  Malls sales are usually final.  Why take a chance? A customer might not even bother to examine an item after they see a ridiculous price.   Even if the item is great, the perception of poor quality is there because of the lowball price. Vintage sales are generally final, so customers feel the need to be a little cautious.

Selling too low is also not profitable.  You can work hard, price low, sell lots, get a big fat check, and still not make a profit.  Read my SCARY post if you dare.

Price items correctly from the start.  Don't bring it in priced high with the idea of marking it down later if it doesn't sell.  One day, I need to write a whole post on that one, but for now, just trust me.

Keep in mind that you can't expect everything to sell quickly, even if it's beautiful and priced perfectly.  The right person has to come along - a person who needs what you are selling.  You may have to wait a few months for a big ticket item to sell.  Expect that and make up for it by having lots of choices in a number of price ranges in your booth. Small accent tables can bring in quite a profit if priced correctly.  In my area, I'd say the accent tables need to be in the $75 to $100 range.  Who knows what it is in your area.

Some months, you may not sell anything big, but your sales of smalls ($50 and less) will  make you very happy.

Also remember, some months are slow everywhere.  August is usually a little slow because many customers with kids are dealing with buying school supplies and sports gear.  Decorating is the last thing on their minds.

One more thing about tipping points - An ENTIRE STORE can be tipped too high or too low.

Customers don't shop much in stores where most things are over their tipping point unless they feel that the goods are sooo special that the prices are warranted AND the prices are close enough to their tipping point that they would be able to rationalize going a little out of their comfort zone.  That makes it very important to choose your mall carefully.  Being in a store where most things are overpriced (or underpriced) can hurt your sales, even if your things are reasonably priced.

Note that what's right for one area could be completely different for another.  Georgia prices are very different from California prices.  Big city prices are different from little podunk town prices.  Know your area.