Pricing may be the most important strategic tool that jewelry company owners and senior managers have to improve the company’s profitability. It is important that all marketing, sales and merchandising personnel have a clear understanding of the pricing strategies being employed for each category and product line. Sometimes pricing strategies are designed to go beyond just improving profitability to include increasing or defending market shares, enhancing revenues or turning aged inventory.
Pricing strategies need to be clearly linked to business objectives. Many jewelry companies have had to address their pricing strategies in recent years due to softer demand and more value oriented customers. However, there is always a danger of becoming too complacent and just accept the status quo of current pricing. Some jewelry companies (along with many retail sectors) are reporting improved demand and less price resistance from some customers. As this continues merchandisers must begin to evaluate each product category and begin to test price increases with select items. Don’t miss the opportunity to begin to access potential pricing improvements at this time.
Now is the time to interview employees and suppliers and analyze historical data to identify potential pricing improvement opportunities. Be cognizant of potential profit improvement by identifying products that contribute to revenue and profit leakages too. What you are searching for are opportunities to challenge all of those “that’s the way we have always done it” ways of defending the status quo.
These unique economic times still require a flexible approach to management. In the recent past that has included price reductions and sourcing lower quality/lower priced products to meet more price resistant customers. Now is the time to begin to challenge those practices, by category, by product listing. There may be opportunities to increase prices on some products in some categories. Begin to “test” offering a few higher quality products that generate more profit. Or improve the margin on some of those more value oriented products. The only constant is change. What pricing strategies have you recently changed due to improving demand?