Breaking it Down: Types of Markups
There are several types of markups that retailers can use to their advantage:
- Percentage markup: The most common type of markup, calculated as a percentage of the product cost.
- Dollar markup: A fixed dollar amount added to the product cost.
- Tiered markup: Different markup percentages applied to different price tiers or product categories.
The Power of Psychological Pricing
One of the essential aspects of Retail Markup is understanding the impact of psychological pricing. These pricing strategies play on customer perceptions and can help boost sales:
- Charm pricing: Setting prices just below a whole number (e.g., $9.99 instead of $10).
- Prestige pricing: Pricing products higher to convey a sense of luxury or exclusivity.