Retail price: out of your head or trust algorithms

Paradoxically, in a hyper-competitive online retailer, a lower margin can bring more profit. What should be the retail price and trade margin to squeeze the maximum out of the market - the topic of this material.





A product markup is the amount that the seller adds to the purchase price to calculate the retail price. In turn, the retail price is the cost at which the final consumer buys the product. Taking into account all costs and analyzing competitors' prices helps to formulate the right price for sale . It is from the margin that all the necessary expenses for delivery, storage, and sale are covered, as well as the payment of wages and taxes. This means that making a mistake is equal to incurring losses, which any seller avoids.





Do not forget about the profit, without which it makes no sense for a retailer to work. That is why every business owner is interested in setting the price of his product as high as possible, and the trade margin can never be zero.





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What affects the optimal price for a product

 





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In order to increase sales or maintain them at the same level, the retail price (and hence the margin) should not be fixed. To quickly revalue their goods, online stores use competitor price monitoring services with recommendations for pricing algorithms. They provide a comparative analysis of the prices of all sellers, general market analytics and an AI-calculated optimal price for each product.








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