March 23, 2016

Items And Pricing In A First Order Matter

Recall our example?

Watch what happens when a customer purchases 2 items at $90 each, instead of 4 items at $45 each.

This is a common outcome. Your merchandising team raises prices, the customer trades off by purchasing fewer of the expensive items, and the net result is a less profitable customer.

See what happens when the customer purchased 3 items at $45 instead of 4 items at $45.

It's helpful to have more items, isn't it?

Now, let's try 4 items, and instead of having them at $45, we'll buy them at $60.

So the secret is to somehow increase prices and increase units.

Unfortunately, it is terribly hard to do both.

At least be aware of the tradeoffs that occur between prices and units. As a former CMO once told me ... "units equal customers".