7 Retail Pricing Strategies Used in Shopping Malls

Choosing the best retail pricing strategy is one of the most daunting tasks for any shopping mall. Various structures and strategies have to be put in place to ensure more consumers are attracted to your business.

Competition in the retail sector is often stiff. Getting your fair share of the retail market in your segment requires a retail pricing strategy that is guaranteed to keep you in contention, not to out-price you out of business. As a rule of thumb, the best retail pricing strategy is the one that works for your store.

Below are seven of the best retail pricing strategies that shopping malls can implement to increase profits.

1. Pricing below the competition

Check other stores to assess the level of the competition. Visit popular malls like the Newmarket Plaza for a variety of different stores. To get through to your competitor’s markets, pricing below them is a sure way of attracting consumers to your business. Since everyone is attracted to lower prices, more consumers will visit your store and purchase more items than they would in other stores.

This can be achieved by negotiating better and lower rates from your suppliers to make it possible to implement a lower pricing model for some of the items in your store.

2. Prestige Pricing Strategies

Prestige pricing is mainly implemented in areas where the location and the exclusivity of the product justify the higher prices. If implemented correctly, one can increase their profit margins quite considerably using this approach. High-end products mainly use this approach to maximize their profits since they don’t move as fast as other products.

Some people also tend to gravitate towards stores that price their products higher than their competitors. This gives them a sense of exclusivity and prestige. Prestige pricing is a very successful strategy if you are looking to maximize profits from high-end clientele.

3. Markup Pricing Strategies

This is one of the most commonly used pricing strategies. Marking up the cost of a product is one of the best ways to achieve a desirable profit. However, these retail pricing strategies should be done with caution to avoid pricing your products excessively higher than the industry recommended prices.

Most of the time, the markup on cost is usually a preset industry standard to ensure retailers operate at a level competitive field. It is also important to ensure your markup is high enough to allow discounts and price reductions (so you can woo more customers) but still give you a decent profit.

4. Psychological Pricing Strategies

This retail pricing strategy is used to set prices at a level where the customer perceives it to be a bargain or fair. This mainly uses techniques to psychologically trick the customer into paying for the product at that particular price, even though it is often not much of a bargain. One of the most common methods used is odd-pricing. Sometimes you will come across products with odd prices such as $3.99 or $199.99.

In essence, these products are priced at $4 or $200, respectively, but your mind focuses on the $3 and the $199 instead, giving the impression that you are getting the product at a much lesser price. Some people also implement prices such as $3.79 or $17.97 that have the same effect. We tend to round down the price to keep our minds at peace when making a purchase.

Even the retail display shelving used may impact the customer’s psychological state of mind. Retail customers enjoy aesthetically pleasing POP displays whenever they step into a store. Take some time to pick the best display cases and shelves that complement your overall pricing strategies.

5. Vendor Pricing Strategies

Manufacturers in some industries set recommended retail prices for their goods. Many small vendors stick to this market standard to keep them in the clear and avoid price wars with their competitors. Mostly, the recommended retail price is set at a level that allows businesses to maintain a decent profit to stay afloat. Some manufacturers may not allow one to sell their product below the minimum advertised prices to create a fair playing field for other retailers struggling to keep up.

6. Keystone Pricing Strategies

The concept of keystone pricing involves doubling the manufacturer’s product price. This used to be a common practice a few years back but has slowly been challenged with increased competition and the rapidly-changing business environments around the world. People now use it in combination with other strategies to keep their businesses afloat. Stores that sell high-end goods that are less sensitive to the set market prices may still use the keystone pricing strategy to drive their profits.

7. Multiple Pricing Strategies

This pricing strategy is mostly implemented during sales and holiday specials, or other special occasions a store may find relevant. It involves selling more than one good or service for the price of one. This tactic is mainly employed to attract more customers to the store. The allure of a bargain attracts them to your store, and they may end up buying products in larger amounts. When successfully implemented, the multiple pricing strategy is very effective in attracting more customers to your store.

Great retail pricing strategies attract more customers to your business. What works for one store may not work for another. The key is to choose a pricing strategy, or a combination of strategy, that works for your business.