Consignment Pricing: How To Price Your Items.
This is a guest post by fellow consignment store owner & ConsignCloud founder Austin Storm. He owns The Storm Cellar, an independent consignment store in Moscow, Idaho. His ineffable entrepreneurial spirit makes him like a magic hat–you never know what’s going to come out of him next.
Finding Your Base
When starting a consignment store, you’ll quickly find that pricing consignment items is one of the more stressful tasks. You don’t want to price items so low that you lose money or upset your consignors, but you also don’t want to price items so high they don’t sell.
It will take time and experience to develop the instinct for pricing used goods. You’ll make mistakes, but don’t let them bother you. If you price something too low, someone will find a bargain — which means they’ll be back, and they’ll tell their friends. And if you price an item too high, you can always mark it down.
Pricing items can take up a lot of your time. To speed the pricing process, create guidelines for yourself. Today, we’ll look at how to determine a base price and adjust it for your particular item.
At my consignment shop, we sell clothing, shoes, and accessories. To establish a base price, we start with 1/3 of the item’s original retail price, then add or subtract 10% for details that affect the item’s desirability (wear, color, styling, etc.). You may need to adjust your base price ratio depending on the type of goods you sell.
Start by getting an idea of the item’s original retail price. It doesn’t need to be exact, just ballpark. There are a couple of ways to do this. I usually go to Google Product Search. Type the brand in within quotation marks (for instance, “Gap”), then add the type of item outside of the quotation marks (for instance, ‘shirt’ or ‘dress’). For most cases, you’ll pull up results for both new items as well as used items from eBay and others.
Laura (my wife) prefers, when possible, to go directly to the website that sells that product. In our example, she would go to gap.com, then search for a similar product. In either case, you should be able to establish a fairly realistic idea of what your item originally cost.
Once you’ve established a base price, note what makes the item more or less desirable. Is it a style that keeps flying off the racks? Bump the price up 10%. Is it something you see all the time? Bump the price down 10%.
Let me illustrate with a working example.
An embellished shirt from Gap sells for around $30 new.
Get your base price (a third of $30): $10.
But this one looks a little worn, so subtract 10% ($1) from your base price .
The style is something you’ve been getting a lot of, so subtract another 10% ($1) from the base price.
This gives us a final price of $8.
Once you’ve set the price, ask yourself: would I pay that much for this item in a clean, well-lit, and well-organized store? Does it seem fair and competitive?
Initially, consignment pricing will feel like a ton of work (and it is!), and you’ll think it takes forever. Don’t despair. Eventually, you’ll be able to glance at a standard item and know, without Googling and without 10%-ing, what the consignment price should be. Each day will bring you closer to that expertise. ConsignCloud will also assist you in this, as it “learns” your pricing and recommends average (as well as high and low) prices for items. Teach your Cloud well, and happy pricing!