Retailers understand that selling the right product for the right price at the right time is what makes a business profitable. While retail pricing strategies may vary from one business model to the next, implementing good pricing practices should be a standard for all retailers. Not only do good pricing practices improve customer satisfaction but it also assures compliance with the law.
Pricing errors can cost a retailer much more than a dissatisfied customer. Poor pricing practices can result in undercharges that drain a retailer's profit. Haphazard or inefficient pricing can also lead to civil or criminal fines if a retailer is convicted of charging more than the advertised shelf price.
And then there is the vendor MAP pricing to contend with. MAP or minimum advertised pricing policies are set by vendors to ensure the integrity of the pricing its products is maintained at the retail level. Simply stated, the vendor sets a minimum price you can advertise a product for in your ads or on your website. If you go below this price, they have the right to refuse to sell to you.
The Federal Trade Commission and the National Conference on Weights and Measures say it can be relatively easy to improve pricing practices—and in the process, boost customer satisfaction, your bottom line and stay in compliance with the law.
- Develop written procedures for all forms of pricing activity in your store. Include ways to ensure that the price in the store's computer matches the posted or advertised price. Remember that your customer expects to receive the lowest price posted or advertised.
- Develop training programs for store employees that stress your commitment to accurate pricing.
- Designate a pricing coordinator for your store. Usually best for the assistant manager to do this since it is also a great development opportunity for him or her.
- Give one employee responsibility for the accuracy of prices of all direct sale delivery items. Make sure DSD vendors check with the pricing coordinator before they do any pricing.
- Check prices of a random sample of items—50 or so—every day to ensure that the price in the store's computer matches the posted or advertised price.
- Make sure prices in every aisle, section or area of the store are checked several times a year. This is the only way you will find all of the undercharges.
- Have the inventory audit team conduct a pricing audit while they're doing an inventory audit.
- Use hand-held scanners to speed price audits. Your wholesaler may be able to provide them.
- Use a portable label printer during price audits to immediately replace incorrect or missing shelf labels.
- Offer your customers a reward if they are overcharged. Giving one item free (up to a maximum dollar value) to any customer who correctly reports an overcharge builds customer loyalty and support.
- Contact trade associations for how-to manuals on pricing accuracy. Food Marketing Institute at 800 Connecticut Ave., NW., Washington, DC 20006; 202-452-8444. National Retail Federation at 325 Seventh St., NW., Washington, DC 20004; 202-783-7971.
- Contact your local weights and measures officials for information about inspection procedures and pricing laws. For a copy of the price verification procedure adopted in 1995, contact: National Conference on Weights and Measures at 15245 Shady Grove Road, Suite 130, Rockville, MD 20850; 301-258-9210.
- Encourage your trade association or wholesaler to set up an industry monitoring program.