Is it time to raise your prices in your resale shop? It could be.
It might be time to take a fresh look at your pricing structure if you’ve been at the same place, price-wise, for a few years.
According to the Consumer Price Index Calculator, what $25 would buy in 2007, costs $25.87 now.
That means that for every $25 of overhead you likely encountered just 2 years ago, you’re shelling out another 87 cents.
And if you haven’t changed your pricing structure in 2 years…that 87 cents is coming out of YOUR hide.
Update 2013: What $25 would buy in 2007 is now up to $28.15. Yup, 15% more. Is something you’d have priced at $25 in your shop, now being priced at $28.15? If not, you might wish to reflect upon your pricing schedule. Not to mention your business profitability.
Look back further: that $25 you set as a reasonable selling price for Item A in 2000? That’s now inflated to $31.15… an increase of nearly 30%. But have you changed your pricing schedule? Chances are you haven’t.
You better.
What! you are gasping. How can I raise prices when so many people are watching their budgets more and more closely? You must be nuts!
Well, there are ways, and there are ways, to raise prices and thus ensure that your business remains profitable.
Rule 1: Watch the basics. Don’t up the prices on things that consumers are well-aware of the going price elsewhere. This applies, for example, to the price grocery stores charge for milk…we all know how much milk “should be”…but they can make it up on filet mignon or Band-Aids for that matter. As resalers, of course, we have a more unique selection so this isn’t a big problem for us, but be aware of what customers seem to notice.
Rule 2: Make EVERYTHING in your shop worth more to your customers. What’s going to make a shopper feel better, talk your shop up, and come back sooner and more often? Yes, it’s my old saw, Perceived Value. Face it: Buying a $12.00 top and having it shoved into a recycled plastic grocery sack by a distracted clerk in a dim store is a totally difference experience than purchasing a $13 top in a bright, friendly shop, and having it carefully folded, wrapped in bright tissue, and slipped into a fresh bag. Which top will be valued more by its purchaser? Which transaction helps the shopkeeper stay in business?
Rule 3: Add products and services that cannot compare to what you carried previously. If you are ready to introduce a new department for your shop, think carefully about its pricing structure. If you never sold that type of item before, no one can say you’ve increased your asking price.
Your services, too, apply under Rule 3. For example, one consignment operation provides Concierge Consigning. What’s that? In essence, free pick-up and free storage of out-of-season goods until it’s time to place it on the sales floor. It also involves, perhaps, dusting off her shoes, wiping down the plaything, and so on. In other words, stuff you probably often do for “good” consignors…for free. The twist is, for this marketed and polished optional service, the consignor receives a lesser percentage…and an incredible amount of suppliers are thrilled to have a “Consignment Concierge.”
Rule 4: Gradually and gently cut your discounts. If you’ve ever sat down and figured out what percentage of original asking price you’re actually receiving, you may be shocked. 10% off for carrying your shopping bag or key chain fob? 25% off because you’re overstocked? Going straight from full price to a 50% off markdown? Adds WAY up.
If you want to gently cut how much you’re discounting, start small: Bag sale price is $15 when it wouldn’t faze them if it were $19? Next FBC Card, make the qualifying purchase a bit higher, so your gift certificate at redemption is a smaller percentage of what was actually spent? Use giveaways which cost less (and probably appeal MORE) as premiums with purchase?
Auntie Kate The Resale Expert 
[…] Where’s my 87 cents? A Guide to Increasing your Prices for Consignment & Resale Shops. […]
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Hi Laurel,
A new shoppe? How exciting.
I would like to invite you to come along to TGtbT.com, Too Good to be Threw, The Premiere Site for Professional Resalers, home of Too Good to be Threw, The Complete Operations Manual for Resale & Consignment Shops…and lots of other Products you’ll find profit-enhancing!
Good luck with your new career!
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consignment Concierge!!! This sounds to me to be what I would like to offer in my new shoppe which is opening the first of August. I have enough storage that I would like to accept out of season but was wondering how to handle that??charge a storage or less percentage etc??? I would love to hear from some experienced peers who are doing this and not creating an accounting nightmare for themselves. Thanks
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[…] what potential clients learn about your shop. Free. Is it time to raise your prices? It could be. (See more posts about consignment, resale, and thrift […]
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Raise prices? You’re kidding, right? Sorry to be so direct but to raise prices here is CA would be the final nail in the coffin.
I’ve run a successful upscale women’s consignment store for the last 15 years. Yes, I’ve raised prices in the past, but that was before we had new competitors popping up every three months and before the local Macy’s 70-80% OFF sales became almost a weekly event (our local Macy’s use to average $60-90K in daily sales, today they average $10-20K).
Some of our competition has the great idea of doing a 50% MD after only 30 days on the floor! Obviously, they won’t last long with this policy (great for customers but who wants to consign when your items are cut in half after 30 days) but in the meantime they’re killing us! We’re working on a new strategy now but one thing is for certain, we won’t be raising prices anytime soon!
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Thanks Kate, for your input. I hate to say I already tried that…but I have to! 😉 Since we started out as consignment and kept a ‘somewhat consistent” MD schedule, I think our customers came to expect it. When we switched to BOR a few years ago, we stopped marking down based on a previous suggestion by you, either by the message board or a PDQ…I don’t remember for sure..but I understood it completely and thought it was a great answer! But, our customers began to notice that we had the “same old stuff” on the racks and nothing new. In our defense, it was because more of the “new stuff” was selling and it was the “dogs” that were left!! So in order to keep the store fresh and merchandise moving we went back to a “somewhat consistent” MD schedule. So with that said, I totally understand where your coming from…but my customers don’t! 😉
Now if I could just see into the future to determine what the dogs will be for sure, then I can just not take them to begin with and a portion of my problem would be solved! So now what? My manager and I have had this same conversation several times. She says we should lower our price and move more at full price. Then there will be less sold at markdown. I agree to a point…but then again if we raise prices then even at our first MD it would still be a slightly higher price than before. So that’s my hangup… Sell more for less and in the end it would be more money because more sold? But there is no guarantee that will be the outcome! It may be the same amount of items sold but now for a lesser amount. Or higher prices and the same amount sold for more profit or less sold because I have raised my prices…I know I am somehow overlooking the obvious or overthinking the concept but I’m just not getting it… 😦
As a side note, most items are on the floor for 8-10 weeks before we start the first round of MD’s at 25% then another week or 2 before 50% and the same for 75%. At 75% they are moved to a clearance rack area but until then they are still mixed with the rest on the sales floor.
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And hi to Diane,
I understand and appreciate your strategy as a consignment shop. Let me add some thoughts.
* First, you are not “marking things pretty low to get people in” , you are doing it to get them BACK & to get them TALKING. I am assuming as well, that since you are only weeks old, that much of what you have on your selling floor is yours, or is consigned by a close friend or family member. So the consignor’s return is not a major issue at this point.
* Yes, do not hesitate to price “nicer” things higher. I assume that by nicer, you mean not just quality and style and condition, but desirability to your marketplace. This desirability is what you will need to watch very very carefully, so that you can use the experience to determine FUTURE pricing. After all, something can be to-die-for… but if you have no one willing to do so…the price might have to be lowered (that’s a lot of the reasoning behind time-determined MDs for consignment shops).
* And yes, your prices will have to be more of a deal now, in your beginnings, than it will as time goes by because you have less traffic, fewer people seeing that item. Demand, in other words, is not now what it will be as you grow. Just be sure not to get “stuck” there, so that in 2012, you’re still pricing like it’s 1999….err, 2010!
(Final note: There’s also a fine line to be danced around vis-a-vis attracting the consignors whose items you want. Having too cheap pricing may make the consignors with better quality goods hesitate over your ability to sell pricier things or even attract customers who WANT quality things. Such a multi-faceted business this is! Ain’t it grand?!)
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Hi Tracy,
Since you do not have an agreement with another person…that is, since the merchandise you sell is yours alone to do with as you wish:
I would NOT mark ANYthing down on any sort of time schedule.
Let me repeat that: do not base your MDs on how much time has elapsed since it was first offered for sale.
MDs, when your goods belong to you, should be utilized to do 3 things, NONE of which is based solely on how long it has been “for sale”:
* Use MDs to move merchandise by offering better deals to the buyer so they buy more, more often. You may want/need to “move” merchandise because you need cash, you need space, or you have a retailer’s feel for that fact that this particular item, category, class will be worth LESS in the near future so you’d better get a return on it now (example: Halloween costumes on October 26.)
* To meet the competition. What other calls on their cash are your shoppers attuned to? A neighbor’s bag sale? A seasonal sale next town over? If you truly need to beat the competition, you will want to grab those dollars before they end up in someone else’s till.
* The ONLY other reason to do MDs is to pique the interest of your shoppers and to add to the flavor of treasure-hunting, “buy-it-now, it may not be here tomorrow,” and to add to your shoppers’ fresh experience: to not have the same-old same old hanging around. (Although this last reason can easily be solved, if such is your choice, by careful rotation of your goods between selling floor and back stock, which is something vintage shops utilize to such great effect.)
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Kate, thanks for your timely article. We are a new store, (in our 3rd week), and initially we are marking items, we think pretty low, just to get people in the door. As the weeks have gone by, we are beginning to get some nicer items in, and are determining that some of them deserve a higher price. Is this strategy correct. Any thoughts out there?
From past experience in shopping at consignment stores, I realized that after some time, the prices started creeping up, but I was so in love with the store by that time that I did not mind the price increases, and they seemed reasonable. It is all in how you perceive the store you are shopping in and its value to you.
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Thanks for another great article! This is something I have wrestled with the past few years and after reading this I am still confused! Maybe you or one of my oh so wise peers can help me 😉 We currently run our markdowns on a “somewhat” consistent schedule. Meaning we do not adhere to a strict weekly regiment of a certian color each week, we may hold off a few days or a week or two depending on the amount of markdowns currently on the sales floor. We do markdowns at 25% increments and then what ever is left over we have recently began to set aside for a seasonal sale. Sometimes it just seems as if we have too much stuff being marked down so I’m just not sure which is best, to begin pricing our stuff lower in hopes of moving a greater quantity of merchandise or to price higher to cover the difference?? When the items reach the 75% MD we are usually only able to recover our cost, maybe a little more or less. But I guess at least I’m not donating it, right? 😉 I am BOR and dealt with the same issue when we were consignment too. (The issue of sell more for less or possibly less for more) I’m just not sure how to approach this let alone what parameters or reports to run that will help me make an informed decision… Any ideas?
At first thought, I would think it would be as simple as just not buying what doesn’t sell…but of course it isn’t that simple… from day to day one cannot determine what will and will not sell! 😉 Our motto here is: “If in doubt–throw it out!” or “If you have to ask for a second opinion, chances are you shouldn’t accept it…”
TIA,
Tracy
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Kate – Very timely for me and my shop this week. I just went jewelry shopping and decided to up the prices on all necklace and earrings sets from $9.99 to $12.99. I used to have only some priced at $12.99, but decided that it’s still less than you would spend at Target.
I also am getting ready for my next bag sale. I have done it for 2 years and priced the bags at $10. I decided this year to price them at $15. In the last two years my quality of merchandise keeps improving and I feel like they are still getting a fabulous deal.
Thanks again!
Julie
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This is a great article share. Just wanted to say I love the CPI Inflation Calcuator too. Thanks.
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