Strategy-Hurdling to Profitability (1,147 words)

Step 4: gross sales of item / hurdle rate = performance of item

Often, I see a cataloger leaving extra margin on the table. That's because catalogers tend to price based on a formula, such as "two times cost." I believe that prices should be set based on the "perceived" value of a particular item. Remember, the price/value relationship is the perceived value of a product at a given price. When prices are set based on the perceived value of an item, the price is generally set higher, which increases the gross margin and helps improve the bottom line.