Your Path to Riches One Dime At a Time
One of the things you do when you open your store is price a whole bunch of stuff. Like many things, it’s both easier and harder than it seems.
Pricing and cost go hand in hand. You can’t buy something for $2 and sell it for $1.80. (Normally. Yes, I know you’re all gamers and you can come up with exceptions when I make blanket statements like that. Focus, Daniel-san!). In the Big Margin Discussion we discussed some elements of the issue of pricing and cost.
Manufacturer’s Suggested Retail Price
Selling things with an MSRP can be a relief in some ways. You don’t need to worry about margins or competitor pricing. You just tag everything in line with its MSRP and think about the next thing on your list of things to pay attention to.
Most of the time. Short-discount items might merit an upcharge. Things you buy in bulk at a special price might deserve a discount to increase the number of items you sell. Outside of those unusual circumstances, pricing MSRP items at that MSRP is not just easy, it’s usually smart.
The good news is that most people will pay MSRP or something close to it. You have a good feel for price acceptance right away. You don’t lose out on the sales of something new by having to experiment.
The advantage to not having an MSRP is that you fare better if you charge more. People are very unwilling to pay more than the listed price for something, especially if they know what it is. Books, for example, have the SRP listed in the bar code. Many people know that. If the bar code reads $14.99, you’ll lose a lot of sales by listing the item at $19.99—more than enough to make up for the extra profit you make on the ones you do sell.
Say you buy a bag of widgets at $1.00 each. Without that MSRP you can choose your own price, gauging price acceptance based on similar items or the buying habits of your customers. If 75% of your customers came in with a coupon you mailed to them, you might have to price them lower (or higher, but include them on your coupons). If the item is something of obvious value to your customers, you might be able to get more money. An MSRP of $2.00 would obviously destroy any attempt to sell them for $3.00 or $4.00. The customers know it’s not worth their time to get in the car and drive across town to buy them from somebody else to save a quarter. Or maybe even a dollar.
Things With an MSRP
- CCG boosters and starters
- Board Games
Things Without MSRP
- CCG singles
- Used miniatures/armies
- Used board games
- Used rpgs
- Single collectible minis
Things That Are Either
- Dice sets
- Single dice
- Hobby Supplies
Things that you buy outside of the distribution tier are less likely to have a listed MSRP. Indie RPGs usually do, but hobby supplies you buy directly from Excel don’t.
It’s not plausible to have a store full of like-priced items. You can’t have a dollar-store format for a game store. You need a variety of prices to appeal to different customers and meet different needs.
You want low-price items. Use these items as upsell items or impulse items. They bulk up tickets, but people don’t normally come in just for these things. Display the upsell items near the main items they support. Stock dice near RPGs, for example. Impulse items should be near the register or on the path back to the register, visible to the customer as he walks by—not at a 90 degree angle from his path.
These items turn a $20 purchase into a $25 purchase. They turn browsers into customers.
You need a lot of middle-range prices. These are the staple items that make up most of your sales. I count booster packs here because people don’t normally come in and buy a single booster. They buy a number designed to fit a pre-conceived unit of spending. A customer comes in with the intention of buying $10 worth of cards or $20 worth of cards.
You need a certain number of big-ticket items. When somebody has a bonus check, income tax return, Christmas money or some other minor windfall in his pocket, you want to be able to sell him something. These items might be big bundles of things at a savings (like a Warhammer army box) or a prestige item, like a limited-edition printing of an RPG, an expensive dice set, or a giant-sized miniature (if there can be any such thing).
You do not need these items. They can, however, be a part of your image. These items make your week. This category usually means high-end collectibles, like very rare Magic cards, rare printings of certain D&D titles, or oddball stuff that doesn’t fit any category (like that life-sized statue of Anakin). The adjective “wood-grain” might fit in here.
The Physical Process
Now that you know what to price and how do you price it, then what?
You can get a price gun for anything from $20 to $200, with most models being under $100. The tags come by the bazillion for a low price. Customers hate not being able to find things (so says shopping genius Paco Underhill, and he’s right). Place the tag where people can find it. Don’t be tricky about it.
Your POS system is there to help you find the prices of things with bar codes, even if the tags fall off or there isn’t one. For odd-shaped items with no place for a tag, like individual dice or CCG singles, create a dummy code and attach all the relevant information to that. You can keep a physical binder of codes by the register to help ring those things up.
This system also allows you to tag things too expensive to put on the floor. Put a mockup or display piece out on the floor so that customers can pick it up and bring to you. A copy of the bar code is on the mockup.
Tags come in a variety of flavors and sizes. They include shelf chips for Lozier-style shelving, shelf-talkers, string tags, etc. They should also have a bar code available. They’re more expensive than price gun labels, but they keep sticky gunk from getting on your products. They also keep tags from being rearranged by customers to defraud you out of your hard-earned money.