Retail Margins: What should you charge?

The product you buy is not the product you sell

Question: If you buy a product at cost or wholesale price from a manufacturer or wholesaler, what percentage should you put on it before you sell it at retail?

buyer-seller-box

Answer: The definition of business I find most useful is this:

“Business is the exchange of resources for mutual perceived benefit.”

In other words, by definition it has to be Win-Win to work.

For the buyer, it’s an EXPERIENCE — not just the BENEFITS they enjoy, but how they FEEL about those benefits (or absence of benefit). THAT’s what drives them onto Social Networks, Review sites, friends’ phones, etc, to either rave about you and your product/service, or to rant about you.

For the seller, it’s about profitselling something for more than it cost you to make or buy. (Any fool can sell it for less.)

In simplest terms, here’s the reality: when you’re the seller, the only thing dumber than allowing PRICE to be the deciding factor for the buyer is MAKING it the deciding factor, with offers like “free quotes”, “we’ll beat any competitor’s price”, “Sale!” etc.

Innovation is the true Key Competitive Edge in any business. But it has to be translated into saleable, needed products or services, or there’s no Basis for Business or Basis for Business Growth.

Even in a retail store where you sell the same products at the same prices to the same market as your competitors, these products are still the Basis for Business and Basis for Business Growth in real terms. What will create the difference between you and your competitors is your Key Competitive Edge. Not products or services on their own. Not even a unique retail location. Innovation will be the deciding factor.

Not innovation in terms of developing new products, but in creating new perceived benefits, new marketing strategies, new ways of communicating with your market place. Creating NEW perceptions to tap into EXISTING emotional responses in your customers and prospective customers.

The product you buy at wholesale is NOT the product you sell at retail!

It becomes a complete package of solutions to customer needssolutions that you create in the prospect’s perception that your competitors can’t or won’t because they lack the ability to innovate in this way.

Remember… a customer doesn’t go to the hardware store to buy a drill bit because they need a drill bit. They need a hole! If you can show them a better, faster, more economical, safer, smarter way to achieve that result, you’re the winner – there’s no competition.

© 2015 John Counsel. All rights reserved.

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