by Donna Boulieu for our 99 Ways to Make a Positive Difference in Your Pharmacy series
Pricing wisely doesn’t mean pricing the lowest (which could equate to pricing yourself right out of business). A balance of lower margin competitively priced items, and higher margin less sensitive items is a strategy that can satisfy your customers and your bottom line. Even if you’re using a pricing program, an occasional review of what’s going on in your market area can help ensure you’re still on track. Before you venture out on your market review, prepare by thinking about and/or defining the following:
- Identify key items
- Your customers are most sensitive to the pricing on repeat-purchase, maintenance-type products. The pricing of these high-profile, fast-moving items can help influence the image of your entire store. Select a few of these items from each of your HBW categories where you want to be competitive to look at in other stores.
- The retails on less frequently purchased items, especially those that treat an acute condition or are typically for occasional use, are of lesser concern to your customers. These help build an overall healthier gross profit. You should also choose items from this group to shop in order to ensure you’re not out of line in areas that won’t net you additional sales based on underpricing your competition.
- Identify your competition and gather data
- Do you have mostly foot traffic or do your customers drive a longer distance to shop at your store and other various outlets? Determining the size of your market area and reach will allow you to focus on your true competitors.
- Shop the retails of the key items you outlined earlier at the outlets you’ve identified as your competition.
- Apply market data intelligence to your pricing strategy
- Do those outlets you view as your competitors offer the same services or convenience that you offer? It’s not necessary to meet the exact retail prices of your competitors, especially if your customers appreciate and value your other offerings.
- Make sure your pricing falls between 5% -7% of the competing items you shopped. Most shoppers will view a price within this range as being competitive.
Now get the word out! Let your customers know you’re front-end is competitively priced. Use signage to highlight key items. When discussing companion purchases with your Rx patients or helping a customer on the floor, tell them you value their loyalty, and let them know you’ve researched the competition and you are pricing wisely to earn their business.
Donna is instrumental in the management of our master item file, item relationships, pricing strategies, fine line philosophies and FSA criteria development & implementation. Responsibilities also include coordination information through our work flow process. In addition, Donna maintains client-specific pricing files and participates in the development and execution of many of our custom wholesaler, retailer and manufacturer projects.