Lowering Prices?

Dale S.

I know that the topic of lowering prices during slow times has been discussed before, but I am curious about you thoughts on something. I was watching some TV news shows and they were showing the price markdowns that retailers are already putting in place for Christmas. They showed price drops of 20-30-40-60%. From the TV news show perspective, this technique is pretty widely spread. (But, who can believe everything that news shows portray?)

My question is: How do these guys do it? Is their initial markup so high that a 60% markdown is possible and still make money? That situation may be the case, but it really doesn't seem likely.

So, how does this approach make business sense? I don't see many of these discounters going out of business due to this approach...

dale

bert0168

BINGO!!!

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Originally Posted by CCCo. Yep, you guessed, sold by a fancy white guy, installed by the brown army.

dirt diggler

I sure wouldn't let the evening news dictate or influence me on how to run my business

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Dale S.

Really? WOW!!! This technique of marking up very high and then advertising your "large" markdowns has also been discussed. It seems like the consensus was that this technique is questionable in morality and that customers would most likely see right through it. If customers would see right through it, how do they get away with it? Am I just being naive on this?

Did those stores just get a lot of free TV advertising with their prominently displayed store signs about the "huge" markdowns? If so, that seems pretty clever...not sure I could do this approach, but it is rather clever...

dale

Celtic

Have you any idea what retailers mark up is?
They may have products lounging about for days, weeks, months, even years before it is purchased.
Think about jewelery.
All year long, most jewelery stores are like a ghost town.
If you had to guess, what do you think the markup is on a gold chain?


Wait until after xmas sometime.
Friday after Thanksgiving is known as "Black Friday" in the retail industry.
The sales from this one day is enough to put a retailer in the "black" after 363 days of being in the "red".
Many retailer jobs I have done have had a complete date of one week prior to black friday ~ they want to be OPEN on black friday - shelves stocked, employees trained, etc
It's literally a "make-or-break" day.

I think the stores that open for specific holidays may be on to something....every mall has at least one ~ the place that sells Halloween costumes, but is only there from Sept. - Oct.; the wrapping paper store, Oct - Dec. Then they are gone until next year.
Helluva act....work 4 months, take off 8.

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dirt diggler

mm black friday ...

You forgot to talk about the part where you get to stop for hot cocoa on the way home from shopping


(Dirt flicking a marshmallow - no seriously, he really is)

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Celtic

I think I'm going to some "Disney on Ice" production on BF...I think I'd rather spend the day w/my wife and kids at a show and lunch/dinner rather than be in a mall on that day.

So there will be hot cocoa...but there will be no mall.

[..and dude, you got a little marshmallow on your lap]

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22rifle

Our friend pcplumber claims to use this approach with great success.

SLSTech

Which one - flicking marshmallows, or wrapping gifts?

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Boogga

Hey Dirt digger

We use Milo, not cocoa for a hot drink, cocoa is for cakes and it tastes like crap in a drink. :-)

Kind Regards!

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22rifle

jack up prices so he can discount them

dirt diggler

ha - yeah baker's chocolate is AWFUL

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THINKPAINTING

Like I have said before location makes a difference, in our area its more a like a depression not a recession.

Prices were already low, allot of painters still believe they are making money at $30 dollars an hour, but when there is a good economy its much easier to get the price you should be getting to make a profit besides a paycheck.

I was in business during 80, and 90's slow down, and believe me this time it looks much much worse for different reasons.

We have seen good stable long standing companies fold up shop in our area, why? simple...no work period.

Nothing pisses my crew off more than seeing all the illegal's coming out of the paint store when we have no work. Its wrong and companies and customers who hire illegal's should be punished but that's not going to happen with this new administration.

I am not a believer of lowering my price unless, my labor and materials coincide. So far my insurance rates have dropped, fuel is dropping, lumber is dropping and on and on it will go.

Its rough out here and looks like a long winter............I will continue to market and think positive but also very aware of what's happening in our economy.

T. D. G.

Hi Dale, One of the oldest marking tricks in the world. I guess its so old some of the younger folks don't know it. When a retailer sets his retail price they set it so high I doubt they will ever sell that item at full retail price. They will offer it at huge discount giving you some reason to believe them. GOING OUT OF BISSNESS FINAL SALE. Sounds believable. then all they do is conduct the sale, change the name of the company and most businesses even keep the same location and employees. Why move you bought into the going out of business sale once maybe you'll buy into again somewheres down the road. kind of buying tickets to the ROLLS STONES FINAL CONCERT PROFORMANCE. Hope that helps Dale now get ready for the best sale month of the year.

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rombo

You just reminded me out the store in the movie don't mess with the zohan. It was called going out of business, so it always seemed like to was a big sale on.

marc

That **** is in your head. Period.
Maybe you're slow because you think it's tough ot there.
I'm from NH and do half my business in Mass. (same area as you)
Yes...it's slow but when that's all you think about that's what you'll get.
How is Newpro, Penquin or Renewal by Anderson staying in business? They sell their windows for more than double their competition.
Renewal by Anderson of New England is selling more than 100 windows per day..6 days per week for over $1000 each. In New England....How can that be because as you said......location makes a difference. They are the nuber 1 Renewal by Anderson franchise in the country.
I guess they just don't believe that it sucks out here.

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Marc

pcplumber

A retailer may have a hundred thousand square feet of winter and Christmas inventory they have to pay for. When sales are slow, many stores are are anxious to sell, at cost, or below, to pay for the inventory, to pay the employees, and to stay afloat.

Contractor's services, and contractor's supply houses, work much different. When contractors are not busy, manufacturers, raise prices, to offset their losses, for the lack of demand (so I've been told). After hurricane Katrina, the demand for materials increases and so did the price for building materials.

The national DIY chains, would not be selling at such low prices, without volume. You would have to believe, they would raise their prices, to offset the loss of volume, if things got really bad.

MALCO.New.York

Yeah! And you eat Vegemite and Marmite, as if it was going away forever!
Blaaaaaah!!! Looks like something that came out of the nether regions of a Rodent!!!!!

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MALCO.New.York

People just need to STOP watching the "News" programs and start assessing life for themselves!

+ YouTube Video

http://www.youtube.com/watch?v=S6BJ3CvPLhs

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Publisher1

At a brief sales planning meeting after our general planning meeting last month, we discussed the idea of reducing prices because of the upcoming recession, and quickly dismissed the idea. Then our sales team set out to see where we could raise our prices without offending the market.
Within a half hour, we came up with three distinctive areas where the prices could go up -- sometimes by as much as 50 per cent -- with no real cost to market position or relationships.
After the meeting, I felt like the anti-matter to Wal-Mart. Instead of "rolling back" prices we are "rolling them up". Does wonderful things for the margins and business profitability. And, yes, the sales are 'sticking' at the new prices. (And you can tell how good this is for the bottom line!)