Price Proactively

One of the keys to profitability is being able to buy and price merchandise effectively. David Peters, Jewelers of America’s resident education and management expert, notes that passive pricing -- with little or no strategy -- is the norm for many independent retailers. But by treating all your merchandise with the same exact formula (such as, buy it, keystone it, put it in the case), you could miss out on opportunities for increased profits. Instead, he says jewelers should use proactive pricing to maximize the profit contribution of your inventory.

He shares the following proactive pricing strategies:

• Cost-plus: Add a standard markup to some items to be competitive
• Cost-plus-variable margin: Use lower markups for fast sellers, loose diamonds, and some other items; take higher markups where you can, but don’t compromise turn
• Slashing markup: Take markdowns to move older inventory
• Remember that one size does not fit all when it comes to pricing. Stay tuned for more tips from Peters on pricing right.