It’s tempting to try to entice customers with discounts. But here’s the thing: Your pricing strategies will have a long-term impact on your store’s revenues and profitability—and strategic increases could boost your sustainability as a business.
If you saved one penny every day, you’d have $3.65 at year’s end. That might seem like chump change, but if you raised the price by a penny on the hundreds of dancewear items in your store and multiplied that over the course of decades, it would add up to thousands of dollars. So to build a sustainable (and profitable) business, should you be raising your prices—and not just by a penny?
Finding the right balance between pricing something too high (and risk having that item not sell) and pricing it too low (which will eat into your profits) can be tricky, but there are opportunities to raise your prices among specific areas of your inventory. And with the ongoing pandemic’s impacts on business, it’s worth looking at whether a strategic price increase could help boost your bottom line.
Identify Your Niche
For Ruthena Fink, owner of Grand Jeté in Saint Paul, MN, there isn’t an exact science or formula at play when it comes to pricing, but she suggests asking yourself: “Do I have a niche, and what is going to be the best price to capture that niche?” Her store opened in 1983 and is locally known for its pointe shoe fittings, with some customers driving hours for an appointment. “We can’t charge the same prices as shoes selling online, but on the other hand, we can’t do the full markup that we might do on a pair of tights,” she says. “It’s a fine line of what I feel customers will pay, but part of the pricing does factor in customer service.”
When it comes to pricing her pointe shoes, Fink does start with “keystone pricing”—essentially doubling the cost of what an item costs wholesale so there is a healthy profit margin—while also looking at the online pricing of competitors. She also uses keystone pricing for most of her other inventory.
At Brio Bodywear in Ottawa, Canada, owner Gilbert Russell charges a $30 (Canadian) fee for pointe shoe fittings, which last 45 to 60 minutes. “Pointe shoe fittings require so much service, and you shouldn’t discount that,” he says. “When you start charging, more people will see the worth and you’ll actually sell more—and to the right people who see the greater value.”
Be Confident in Your Customer Service
When Brio Bodywear first opened in 1987, Russell’s pricing strategy was to get customers in with low prices and then keep them coming back because of the superior service. “If I were to do it over again, I don’t know if I would use low pricing because there is always going to be someone who is cheaper, and so then it’s a race to the bottom,” he says. “While discount pricing strategy works for a mass merchant, it doesn’t work in dance.”
Russell suggests keeping keystone pricing or manufacturer suggested retail price (MSRP), which are often the same for dance items, in place for commodities (items that are everywhere and for which the price is well-known). “Don’t run around trying to be cheaper. You’re offering service and fit,” he says. “Provide amazing service and be proud of that and be confident that you can charge more for the special items you bring in.”
For example, if a fancy leotard arrives with a $58 MSRP, but you think you can sell it for $62, then be confident and mark it up. “No one is going to care or notice the difference if you charge $24 instead of $22,” Russell says. “As retailers we’re afraid of pricing higher and we shouldn’t be. People are used to paying money for products they want.”
Offer “Good-Better-Best” Options
Rafi Mohammed, founder of Culture of Profit, a Cambridge, MA–based pricing-strategy consultancy firm, recommends offering good-better-best choices. “You don’t want to put people in a take-it-or-leave-it situation, so give them a few options,” he says. For example, when you go to the car wash, you choose which level of service you want. “You’d think most people would go for the lowest price, but that’s not necessarily the case,” Mohammed says. “You could be leaving money on the table by not offering a premium version.”
Russell says he finds the psychology behind pricing fascinating, especially “anchor pricing.” That’s when a retailer creates a favorable comparison by bringing in higher-priced products to make other products seem less expensive. This is similar to the good-better-best strategy or listing the original price alongside a discounted price to show the savings gained by making a purchase.
“We might have a $150 dance bag that a dancer shows her mom, and the mom might say, ‘That’s too expensive.’ But then we bring out the $80 version and she says, ‘Oh, OK. You can have that one.’ Having the more expensive option on hand changes the perception.”
Consider Your Timing
Assessing when to adjust prices should happen fairly regularly. While Fink monitors sales trends and makes adjustments, she generally waits to do any major pricing changes until the new year after her vendors historically raise their prices; during the pandemic she has been monitoring sales trends and cost changes almost daily and making more frequent changes. “I try not to put extra pricing issues on customers when they are stocking up through the fall and Nutcracker season,” she says. “I want to help them get set up for the season and have positive thoughts about us and about enrolling in dance. I want to keep them coming back.”
Russell does a large-scale evaluation twice a year to see if anything is underpriced, and he also implements price increases when his costs go up. “However, if we’re seeing something coming in and flying out the door, then we make sure that the next time stock comes in, the new ones are priced higher,” he says.
Think twice, however, about raising prices at a set percentage across the board. “I’m never a fan of a uniform approach of raising prices 3 to 5 percent,” Mohammed says. “Every business needs to be worried about price shock during a time of transitory inflation. A higher-than-expected price sticks in customers’ minds. You don’t want to risk being considered ‘too expensive,’ because once that opinion is set in a consumer’s mind—particularly for products that don’t regularly fluctuate in price—it can be challenging to reverse this psychological impression.”
Hannah Maria Hayes has an MA in dance education from New York University and has been writing for Dance Media publications since 2008.