In Margin Master, a Pricing Strategy is a clearly defined set of rules that define a retail price for every single item in your organization. These rules are created and maintained in Margin Master so the program can help you effectively control your pricing over time. An effective Pricing Strategy takes into consideration your customer base, your local market, and your local competition. The ultimate goal of a good Pricing Strategy is to create a Pricing Image that will allow you to service the customer and survive and thrive in your local market. Due to market variations, a Pricing Strategy will be different for every organization.

Whether you are a single store, or have several stores, Margin Master gives you the ability to easily create and maintain one Pricing Strategy that covers every SKU in every store. And better yet, you can execute your entire strategy with the click of a button.

Once your Pricing Strategy is developed, you will save time and increase accuracy in your pricing. Executing your Pricing Strategy month after month allows you to implement the same Pricing Rules time after time. This way, the only price changes you have each month are the items that no longer meet the rules that you have set for them. Margin Master easily identifies those items, and you can either correct those items, or create a new rule to your Pricing Strategy that covers those items.

The key to creating a successful Pricing Strategy is to work with the Top Down Principal. Basically, the initial step to your Pricing Strategy should cover every SKU in your organization, whether your organization consists of one store or 20 stores. After that initial step, you continue to create smaller steps until you work your way down to that SKU Level Exception. For example, let’s say you have 3 stores that are all priced the same, and you want to create a pricing strategy for all 3 stores to be at Level 1. The first step needs to cover every item in all 3 stores. So step 1 should be – Take everything in all 3 stores and set it to Ace Level 1.

As a second step, maybe you want to take your Sensitive and Competitive Items greater than Ace Retail to Ace Retail pricing. So, step 2 needs to be – Take all Sensitive and Competitive items in all 3 stores, to Ace Retail.  As another step – SKU 58549 is a SKU Level Exception and you want to plug a retail of $.04 on that item. Based on the steps that we have just created, here is your Pricing Strategy:

• Take Everything in your organization and set it to Level 1
• Take all Sensitive and Competitive Items and set them to Ace Retail
• Take SKU 58549 and plug a retail of $.04

While this strategy is certainly very basic and over simplified, it outlines the correct way to use the Top Down Principle. Notice that the first step in this strategy covers every SKU in your organization. The second step focuses on a smaller group of SKUs within your organization, and the final step is covering a single SKU level exception in your organization.

Aside from the steps we have just created, you are also able implement store specific steps to your pricing strategy; you can focus on a specific Department, Merchandise Class or Product Group. You can also implement Rounding. All the tools available to you in Margin Master to assist you in pricing are still available to you when creating your Pricing Strategy.

Initially, your Pricing Strategy may consist of only a few steps. As time goes on, and you are better able to determine your market specific pricing needs, you may add steps to your Pricing Strategy or make changes to your Pricing Strategy. A Pricing Strategy will change over time. Once your strategy becomes solid, you will see that it changes less over time.

How does a Pricing Strategy Work
By creating a Pricing Strategy, you are streamlining your price maintenance process. A Pricing Strategy gives you the ability to implement several steps time after time, without running the risk of missing a step. Prior to implementing your Pricing Strategy, you may have been using Margin Master to maintain your pricing. If your goal was to have all of the SKUs in your store at Ace Retail, you probably went into Margin Master and said: “Show me everything that is currently less than Ace Retail”

Once Margin Master displayed those items, you may then create a Future Price of Ace Retail. Once you have done that, maybe you realize – “Oh, but Merchandise Class 136 needs to be at Ace Retail less 5%”, or “I want to take my Blind items and set them to Level 1”.

These steps are great, but the tricky part is to remember next month what you did with your pricing last month to ensure you get the same results. By utilizing Margin Master’s Pricing Strategy tool, you can now save each one of those steps as part of your Pricing Strategy, and execute them all with the click of a button. By executing your Pricing Strategy, Margin Master literally goes through and processes every step you have created for it, leaving you with only the items that need a price change. Margin Master then displays all of your price changes in the center of the screen for you to review, export and implement. To help you visualize this, let’s take a look at the diagrams below:

We are going to look at this in very simple terms. Let’s say your entire organization consists of 8 SKUs, and you want your 8 SKUs to be at Ace Retail Pricing. By looking at this chart, you can identify the SKUs that do not meet your Pricing criteria of Ace Retail Pricing – but to do so, you must look at each SKU individually. Now, imagine having to do this in a normal retail environment of over 10,000 SKUs. Without a Pricing Strategy, you must manually correct each item to meet the criteria you have set for it.

BASIC PRICING STRATEGY
By developing a Pricing Strategy, you are basically creating rules that tell Margin Master “I want these 10 SKUs to be at Ace Retail at all times”. So, when you get your Ace Data on a monthly basis, you simply execute your Pricing Strategy in Margin Master.

SUBSEQUENT REVIEW WITH PRICING STRATEGY
Margin Master then identifies which items do not meet your pricing criteria……

PRICING STRATEGY DRIVEN PRICING ISSUES
…..and displays only those items for your review. You then have the ability to add these SKUs to the rules already set in Margin Master, or create a new rule for the item(s).