Pricing Effectively in a Competitive Market

If you're a boutique owner, especially online only, you've probably second guessed your pricing once or twice. After all, a lot of boutiques tend to carry the same items - and with the millions of China knock-off sites, it's harder than ever to price inventory. Most online stores follow a simple strategy: cost x 2.5 = price. Of course the cost and markup varies on the store, though.

My best advice to every business owner is to stay in your own lane. You can't spend your energy wondering what Sally is doing down the street. Use your energy on something productive for your business. What works for someone else may not work for you. Success is different for all of us. With that in mind, there are a few reasons why pricing for the same item may be different between different businesses:

  1. Shipping costs - this is very true in the boutique world. Let's say two businesses order the same pack of tops from the same vendor located in California. Boutique A is located in Arizona and Boutique B is located in Maine. The shipping cost for Boutique B to get those tops is much higher than Boutique A pays because of the distance - and you should always calculate shipping prices into the cost of each item. 
  2. Volume - If Boutique A is placing a large order, they'll most likely get some kind of discount for doing so. If Boutique B placed a small order, they won't receive the discount, which changes the cost of each item.
  3. Overhead - if Boutique A has a storefront, they are going to have more overhead than Boutique B who is a small, online-only store. The costs of running a storefront are much higher than the costs of running a business out of a small home office.

Let's be honest, you're never going to know exactly how much someone paid for a pack of tops. You can guess based on what you paid, but there are so many factors. 

The prices of your items don't really matter! If you have a top priced at $3 more than Sally down the road, who cares? If you're running your business the right way and keeping your customers happy, nothing else matters.

Happy Tuesday! Be sure to stick around for tomorrow's Boutique Week focus: Don't Put Your Eggs in the Facebook Basket.