Pricing Structure in the Toy Industry
Despite changing societal and economic trends, there will always be a market for toys as long as there are children to play with them. However, there is more competition than ever before from superstores like Walmart and online retailers like Amazon. The best way to reach your target audience and maximize your earning potential is to utilize an appropriate yet attractive pricing structure for your entire inventory.
Getting a handle on your overhead expenses is an important first step in creating your pricing strategy. You need to know what exactly you are paying in rent, utilities, wages, and advertising to learn how low you can price your toys while still making a profit. Be sure to include the wholesale cost of any merchandise that you buy for resale.
Before you can start pricing your toys, you should also know what prices your competition is offering on the same or similar items. This will help you to avoid pricing yourself out of business and will give you an idea of whether or not you are paying too much for your inventory. If you can beat the prices of your competitors while still turning a profit, you will have a much better chance of selling your wares.
Evaluating the supply and demand of every single toy you plan to carry will help you to not only pick and choose what the best money makers will be each season, but will become an indicator of how high you can price certain items, despite your competition’s strategy. For instance, if you were to purchase stock for the winter holiday season of an item in high demand but low supply, such as the newest video game console from a major company, you will likely be able to charge a higher price than your competitors and still sell your inventory.
Getting feedback from consumers in your area is extremely important because it lets you know how they feel about your pricing structure. Your market research should include reading information online as well as case studies. Conduct focus groups and offer surveys both in-store and online. Evaluating how your target market feels about your pricing strategy as a whole will give you insight regarding whether or not you should lower or raise prices.
Running advertised targeted sales throughout the year is a great way for you to pique the public’s interest and move more inventory. Having a sales strategy also provides you with the option of keeping the original price of your toys higher. During peak times for toy sales, such as Black Friday and the ensuing holiday season, you can use sale days to keep the final price of the most in-demand toys on par with competitor pricing. Meanwhile, you stand to make an even higher profit in-between sales from consumers willing to pay full price due to convenience or supply and demand. Make sure that you advertise your sales through both traditional and online channels in order to reach the maximum amount of potential shoppers.
Offering a generous price-matching policy is another great way to drive sales in your store. To utilize such a policy in the most attractive way, you should advertise that you will meet or beat prices that come not only from competitors’ ads, but from printouts of prices that online retailers are charging. Advertising your price matching policy will give you the chance to experiment with keeping your regular retail prices a little higher than your competitors while still offering a way to beat them.