How to Buy Clothes without the Retail Markup
For example, if a boutique owner needs $75 to buy a jacket from a wholesaler, he or she will double the price and mark it as $150.
This standard practice is called keystone pricing.
However, some retailers may choose a higher multiplier (
Usually between 2. 2 and 2. 5)
Depending on the brand\'s prestige or overall pricing strategy.
Retail markup is the difference between the wholesale price and the retail price, as a percentage of the number on the label;
In the jacket example above, the price increase is 50%, which is half the retail price.
In most boutiques and department stores, you will see marks ranging from 50 to 80%.
While these pricing strategies look a bit outrageous, keep in mind that these increases are meant to help business owners pay rent, insurance, wages, advertising, taxes and other expenses.
Of course, not all items are sold at retail prices.
There is a certain flexibility in profit margins, clothing suppliers can reduce prices during special promotions, Mark Sales of unpleasant goods, and offer discounts to their most loyal customers, while also earning reasonable profits.
When it comes to the designer series, the actual price increase can be much higher, as advertising, celebrity endorsements and prestige can help increase the price set by the manufacturer.
The average price of some luxury handbags is 10 to 12 times the actual price [source: Moore].
The cowboy market shows how the magic combination of cost, profit margin and mark-up leads to similar products being sold at various prices.
What is the difference between a famous cowboy and a basic blue jeans?
The production and wholesale price of a true teach the latest \"it\" jeans is $50, priced at $152, while the average store price is $335.
These jeans are made in the United States and use high-quality fabrics and then advertise as celebrity favorites.
Jeans sold in Sears or Cole for less than $50 may be sewn overseas, where manufacturing costs are lower and costs are lower (
But the quality is good. fabric.
The profit margin of luxury jeans is large, while the jeans sold at Wal-Mart
The gross profit margin of Wal-Mart or Sears, which is much lower, is less than 20% [Source: Guest Benefit].
All in all, setting the right retail price is a bit of an art form because when the consumer decides to buy the item, they actually decide the right selling price.
Today, retailers use computer software to set prices and then determine when and how much the prices will be reduced based on the goods sold and the expected new goods.
Next, let\'s take a look at several ways smart shoppers can avoid paying for retail.