Retail Price Ladder

How to implement an effective price ladder

The key things to consider if you want to implement a price ladder are:

• What is the price range (minimum to maximum) that my ideal customer would expect to pay for this kind of item?

• Set the prices so the steps (the rungs of the ladder) are fairly equally spaced – try to ensure all your items deliver a consistent % gross margin

• Merchandise the product with the cheaper items to the left and with the more expensive to the right

• Make sure the product packaging / POS clearly demonstrates the additional value-adding attributes to the customer if this is not abundantly clear

To find out how well it can work for your business will require some level of trial and error. A good price ladder that is well merchandised will enable customers to up-sell themselves with no intervention from sales staff – what retailer could ask for more?!

What is the benefit of the price ladder?

If your retail business typically realises an average 60% gross margin then of course the higher up the ladder the customer goes, the more they spend, increasing both cash delivered margin and average transaction value (ATV).

What is a price ladder?

Retailers who understand their positioning should have prices that offer the target customers choice within their budget for products that meet their mission.

Published by Raffaele Felaco

I am an enthusiastic leader with strong background in direct and indirect sales with an exten- sive experience in both retail and wholesale business. I have been fortunate to have worked alongside teams in structured environments both in Italy and abroad over the last 20 years, en- abling me to develop strong leadership skills, a natural approach in effective communication, the ability of positively influencing others and master complex business negotiations.

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