Employ a Detailed Approach to Merchandise Analysis

Determine Price, Profitability
Merchants often are pushed to achieve the highest possible margin. If an item’s price point is pushed beyond consumers’ view of “value,” however, then the item’s margin percent will yield nothing in terms of contribution. As you consider setting an item’s price, the way to ultimate profitability is to determine the retail price first, then find or negotiate the lowest cost possible to achieve that initial margin target. Bear in mind that an item may produce more margin dollars by increased unit volume at a lower margin vs. trying to achieve a higher margin percent.