Did you know that there’s a hidden force quietly costing independent store owners thousands each year and it is called gut-based pricing.
What’s really hurting your profits? Not the competition. Not slow traffic. It’s gut-based pricing; retail’s silent killer.
Watch the full episode in YouTube:
Today, in this episode of The Richer Retailer, I’m naming the problem, unpacking the markup math, and shifting you from emotional guesswork to intentional profit.
🎧 Listen to the episode here:
Gut-Based Pricing Is Costing You Profit
If you’ve ever thought:
- “I wouldn’t pay that, which means, I can’t charge it.”
- “My team said this seems too expensive.”
- “I’ll just double the cost and call it good.”
…you’re making decisions based on gut, not strategy. And that’s costing your margin big time.
💡 Gut-based pricing with emotion is not pricing for growth. Margins, not feelings, pay your rent, your team, and yourself.
The Right Pricing Strategy Starts with Markup
Let’s talk math, not guesswork.
At RETAILMavens, we teach that a 60% IMU (initial markup) is non-negotiable if you want a profitable, sustainable business.
Here’s the formula:
Cost x 2.5 = Retail Price
Example: $20 x 2.5 = $50 → That gives you a 60% IMU.
This margin gives you breathing room to pay staff, reorder stock, and grow with confidence.
Not every item will hit 60% and that’s okay. Ultimately, as a smart pricing strategy, your goal is to hit that 60% average IMU across all your inventory.
Prefer to watch? Catch the full episode on YouTube here. (insert link)
Psychology Drives Sales, Not Just Price
Customers don’t shop with a calculator. They shop with emotion, confidence, and perceived value.
Shift your focus from “is this too much?” to… ask:
- Is the product well-presented?
- Is there a story behind it?
- Am I using anchor pricing?
Here’s how it works: Anchor pricing involves displaying high, mid, and low price points together, gently guiding customers toward the option you want them to choose. This is effective because it’s one of the most powerful tools in pricing psychology.
Similarly, rounded prices create a more intentional and polished look for boutique or curated stores. So, save the .99 endings for bargain bins or lower-cost items.
Handling Team Objections with Confidence
Your staff might ask, “Why is this so expensive?”
You say:
“I get it. It feels high, but we’re building a store that supports all of us. We’re pricing with purpose so we can pay the team, pay the bills, and stay in business.”
Then teach them to sell the value, not the number. Let them play with styling, storytelling, and building confidence through practice.
Your Millie Moment: Trust the Math, Not the Fear
I once underpriced a stunning French outfit for kids because the tights cost more than the dress. Fear kicked in and I ignored the strategy.
My coach challenged me to bundle it at a 58% markup. I was nervous… but it sold out fast.
Your challenge:
Next time you’re tempted to price from emotion, pause. Can you bundle it? Can you shift the value narrative without giving up your margin? Trust the math.
This Is More Than Just Numbers;
Pricing isn’t just about the cost. It’s about:
- What your customer feels
- What the product represents
- The story behind it
- How confident you are in presenting it
The truth is, at the end of the day, you’re not just selling items, you’re building a store that funds your future.
Your Next Step: Stop Guessing. Start Growing.
Download the Free Pricing Worksheet, it’s packed with formulas, price psychology tips, and markup targets.
Book your free Game Plan Call and let’s turn your pricing into a power move not a problem.
Remember, pricing with purpose is just the beginning. Join our FREE Profit Club Webinar to learn the proven pricing and growth strategies that help retailers thrive with confidence, clarity, and community.
Don’t forget to join us in our Facebook community: Richer Retailer Facebook Group.
It’s important to know this isn’t about being the cheapest. It’s about being the most valuable to your customers, your team, and most of all… to yourself. 💚