This article was written by Sara Burks and reprinted with permission of The Boutique Hub.
1. Myth: “Cost is the basis of my retail price!”
WRONG! Many retailers believe that the cost of an item should determine its selling price, but that’s putting the cart before the horse! Instead, start by asking yourself what price your customers will pay for that product based on its value, demand, and market trends. Once you’ve established a price point that makes sense, then evaluate if the cost aligns. If you can’t make a profit at the price customers will pay, reconsider the product. The goal is always to ensure you’re making money on your investment!
Example: If you know that a candle could sell for $25, but the cost is $15, it’s not worth stocking unless you can source it at a better price or find a different product that delivers a healthier profit margin. (think time it takes to photo, merchandise, price it, ship it, receive it, etc – that mark up is eaten up real fast)
Always think profit first, then cost.
2. Myth: “Increasing prices by a small amount won’t really make a difference!”
WRONG AGAIN! Small increases can add up in a big way! Let’s break it down: Say you sell 1,000 items each month and raise your prices by just $0.99 on each item. That’s an extra $990 in profit that you didn’t have before! And guess what? Customers rarely notice these tiny adjustments.
Example: Do you think a customer would walk away from a purchase because the price is $39.99 instead of $39? It’s unlikely! But that extra $0.99 across many transactions is HUGE for your bottom line. Always consider the cumulative impact.
3. Myth: “My customers are driven by price alone!”
Are they really?It’s easy to assume price is the only factor driving your customers, but that’s rarely true. Most customers are driven by value—how well the product meets their needs and the experience they have shopping with you. In fact, setting your prices too low can cheapen your brand, making your store seem like a bargain basement rather than a boutique. Instead of competing on price, focus on delivering a unique product, great service, and an exceptional shopping experience.
Tip: Ask yourself what type of customer you want to attract. Are you chasing the deal-hunters, or do you want shoppers who appreciate the value of what you offer and are willing to pay for it? Leave the race to the bottom to the big-box stores like Walmart!
4. Myth: “My customers would rather pay a flat $50 than $49.99!”
WRONG! There’s a reason pricing strategies like $49.99 and $199.99 exist—they work! Psychological pricing tells us that customers focus on the first number they see in a price more than the last. That means $199.99 feels cheaper to them than $200, even though the difference is only a penny. It’s a subtle trick, but it can have a big impact on buying decisions.
Pro Tip: Take advantage of psychological pricing to make your products feel more affordable without undercutting your profit.
5. Myth: “Lower prices will bring in more customers!”
NOT NECESSARILY! It’s easy to think that dropping prices will increase foot traffic or sales, but lower prices don’t always equal more customers. In fact, customers often associate low prices with lower quality. If you constantly undercut your pricing, you may attract deal-hunters, but you’re also lowering the perceived value of your products. Sometimes, a higher price point can communicate exclusivity, quality, or trendiness, which can be more appealing to your target audience.
Example: Think about luxury brands—do they drop their prices to attract customers? No! They charge more because their customers value the exclusivity and quality of their products. You want your prices to reflect the true value of what you’re offering, not just the lowest deal.
6. Myth: “Discounting is the only way to increase sales!”
FALSE! While discounting can be effective for short-term sales boosts or clearing out old stock, it’s not the only way to drive revenue. Over-reliance on discounts can train your customers to wait for sales, lowering your profit margins and eroding your brand value. Instead, try offering value-added services—like bundling products, providing free local delivery, or creating a loyalty program that rewards repeat business.
Example: If you’re selling a home decor item, you could offer a styling consultation or bundle it with complementary products instead of cutting the price. Find creative ways to build value without cutting into your profits.
7. Myth: “I have to price my products the same as my competitors!”
NOPE! While it’s good to be aware of what your competitors are charging, you don’t need to match their prices to stay competitive. Every business has its own unique strengths—whether it’s customer service, product quality, or the overall shopping experience. You can often charge a premium if you offer something that sets you apart, like personalized service, expert advice, or better-quality products.
Tip: Competing solely on price is a losing game for most small businesses. Instead, focus on what makes your store unique and build value through the experience you provide. This will allow you to justify higher prices.
Do you agree?
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