As any savvy business owner will tell you, there are important factors that affect your profits. It can become a blur of information until you look at each part of the profit picture. In this article, we'll cover how your pricing can help protect your profits.

A good pricing strategy always makes reference to some other price as a comparison. Examples include a comparison to a highly valued, high price item of a trendy designer or a comparison to the full retail price of a notable department store. Knowledge of your market provides another means to price comparison. If you identify the most popular price for a popular item in your market, you can compare your items to that magic price.

No matter what the price, a customer will only buy if she finds value for your price. Each customer has a unique and very subjective idea of value. If you identify what your customer values in the merchandise you sell, you can add a discussion of value to your price when helping her select new apparel.

Your job in protecting your profits is to educate each of your customers about the value she gets when she buys your merchandise.

To sell your customer on your merchandise at your price, you must make comparisons. Rare is the customer who walks in and spots one item to buy at any price.

Your best method of price comparison depends on how you set your markup. When you buy off-price where your wholesale cost is below the original wholesale, you have many options. If you set your price to show a discount off the original retail price, you have two plusses. Your customer gets of good price and can take the garment home that day.

When you buy at the full wholesale price, as is the case with current season merchandise, your selling price may not reflect any discount. Instead your value added to the sale might be the convenience of shopping where the outfit is available to try on, purchase and take home. There's no waiting and no risk of the item selling out. In this day of the Internet, don't underestimate the importance of your having the item in your hands when you show the customer.

What is Full Retail pricing?

Specialty boutiques and leading department stores with the very latest women's fine apparel have many merchandising challenges. With the high cost of maintaining a beautiful store and lots of inventory and staff, the overhead costs are high. These stores use a traditional pricing method where the Full Retail Price is at least double the wholesale price or double plus ten percent. Doubling the wholesale price is called, Keystone pricing. For these businesses, Keystone pricing or higher helps cover their overhead costs and leave room for profit. When possible, such top businesses may fine items that can have a triple markup, which helps provide a cushion when it's time for markdown and a sale.

The Manufacturer's Suggested Retail Price is typically Keystone or higher. With the best manufacturers, the MSRP will be reasonable, often equivalent or very similar to the best department stores' selected pricing. Occasionally you will find labels with unrealistic MSRP, so make your own determination if you question the amount.

Your Magic Price Point

The Magic Price Point is the hot price for a particular type of garment within your market. It might be a day dress, dressy suit or prom dress. Review what is selling in your store and your local market. Note what price your customers ask about. If you can find the Magic Price Points for your market, you can set your retail prices at your area's Magic Price Points. Then, you have a powerful tool to educate your customers of the value of your price.

Providing High Value for the Price

High value for the price is a subjective view for each of your customers. Value might be in terms of the services you provide, the convenience of having your merchandise in stock ready to buy. Value might be in terms of the price itself, especially for those customers on a tight budget. In all cases, there is value in your friendly conversation and your willingness to help your customer look her best.

No matter what the price, a customer will only buy if she finds value for your price. Your job in protecting your profits is to educate each of your customers about the value she gets when she buys your merchandise.