For businesses that sell products, pricing poses an ongoing challenge. It’s important to make a profit without sending customers scrambling to competitors. Brands can offer price-matching guarantees and monitor pricing on a daily basis, but customers could be a step ahead. It’s important to constantly reevaluate sales reports to find the right price point to make money without scaring off customers.
If your business uses a point-of-sale (POS) system to process orders, you could have the only tool you need to gather data. By choosing the right solution, you’ll be able to monitor sales to know as soon as possible if your pricing is impacting sales. Here are a few ways POS reports can be used to make fully-informed decisions about your product pricing.
Many businesses make the mistake of watching daily numbers without looking at the big picture. Choose a POS that has reporting options that allow you to monitor trends. You’ll benefit much more than if you just watch how your sales fared on a particular day. Conduct A/B testing to determine the difference between two different pricing options. Do you make more of a profit when you set your prices lower? Does a particular product lure customers into the store, where they choose to buy additional items? If so, lowering your price even more could be a good move if it helps sell other products.
One of the best ways to lure customers in is to offer a big sale on your products. But how do you know if your discounts are paying off? If your POS follows trends, you can pull reports on how a percent-off sale or coupon campaign is paying off. You can compare sales during the promotion to those you typically see to determine if it’s worth it. You can also learn exactly how much of a discount you need to offer to see extra traffic.
New inventory sells better, according to marketing research. In fact, 90 percent of all store sales come from inventory less than ten weeks old. When you have items that remain on your shelves for months at a time, you’ll notice that customers pass them over in favor of newer items. A POS can provide insight into your inventory age and alert you when a product nears its end-of-life so that you can move it to the discount bin and get it out of your store.
Few things upset a customer than being quoted a different price at the register than they thought they would pay. Your pricing could be outdated on your shelving, on the tag you have attached to the item, or in the marketing you use to draw customers in. In addition to being upcharged at the register, pricing inconsistencies could lead to walkouts. A good POS system will make it easier to catch those inconsistencies, letting you investigate why transactions are being voided and make sure your price tags are up to date.
There’s quite a bit of information out there on the psychology of pricing, geared toward helping businesses choose the right pricing scheme for their product lines. However, each business has its own unique customer base, making it difficult to accurately determine the right strategy for your own shop. A POS will help you compare those basic pricing ideologies with your own results, which will let you test out what you read and measure the results.
The most important thing a POS brings to a business is competitiveness. With so many other brands using automation to power their operations, it’s vital that you have the best tools possible to be able to compete. When surveyed by Software Advice, more than 60 percent of retailers revealed that they’re using features within their own POS to set prices. Companies that don’t use these tools will quickly fall behind.
Pricing is tricky, but technology has given business the ability to make fully-informed decisions about the cost they put on each item they sell. By finding a POS with built-in reporting, businesses can give themselves an edge over the competition, helping them win customers and improve customer service, which will then lead to loyalty and recommendations.
Dan Steiner is an entrepreneur, Internet-marketing expert and author from San Luis Obispo, Calif. He currently serves as CEO of Avila Web Firm, an award-winning web-design and Internet-marketing firm. His work has been featured in a number of publications, including Entrepreneur, HuffingtonPost, and Inc.