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Retail Pricing Model

Now that you have your budget set and you know your monthly costs and salary expectations you are ready to set up a budgeted hourly rate for you shop and use it to calculate your selling prices. Remember, you are running your business and you have your goals and expectations, costs and expenses unique to your business to cover. Set your prices to pay you what you expect to be paid for the work that you do. Don’t forget when doing your expenses for your home based business to look at local real estate and budget for a retail location the size you expect to have in your home business so that when you make your move from home to retail you do not have to have a huge price increase to pay the rent.

PRICING FOR PROFIT from those who make it work

Example #1

Retail operations need to work on a factor that keeps their cost of goods at 30% or less.
So how do you do that?
Add the costs of the items needed to build a club.

For example a Brand X set of 3-PW, AW or SW (Customer’s choice).
Price is for a 9 club set.

Brand X cost is $11.00
Steel shaft – Brand X cost is $8.00 (this is my base price for steel shafts, I use it for all basic steel shafts)
Grip cost is $3.00
Misc. costs for tip wts., hosel weight, ferrules, etc, average cost $2.00
total cost of goods = $24

$24 divided by .30% = $80 per club so multiply $80 X 9 = $720 for a steel shaft set

Just add up all your costs of goods, divide by .30% and you will get the cost per club. The example above is where I am at for my starting point. That is rock bottom for me. If forged head, graphite shafts, Rifle shafts, upgrade grips or other things that incerase costs, I just add the difference to my cost of goods and divide by .30%.

If you use the .30% cost of goods factor, you will be about the same price as Callaway, which are premium priced. A real bargain for your customer to have a better club at a price that low.

Example #2

If you double the price of your components, drop the double-price for the components. Customers know what it costs and won’t pay double.
Price the components at 1st column pricing.
For iron set charge 1st column pricing plus $50 per club which covers all expenses and fitting. This is for an 8-club minimum purchase. Less than 8 clubs I bump the price up to $55 per club.

For drivers do 1st column plus $150.

Fairway woods (if purchased at the same time the driver is) 1st column plus $75.

Best policy is to establish a baseline price ($70 per iron for a cast head, steel shafts, rubber grip)
add on to that as the price of the components rise.

Iron clubs start at $70 per iron and go up depending on the price of the components derived from the fitting session.

Fitting prices vary with club makers. Some run as much as $250 for a fitting session. Some fitting charges are rebated if a set of clubs are purchased immediately after the fitting session. Some charge a flat fee that is nonrefundable and is not rebated for any reason.

Average fitting fees in most shops are in the $100 to $150 range and are in addition to the price of the equipment.

Some club makers will offer fitting services for anyone, others will only fit for customers buying clubs or refitting clubs. This too varies from club maker to club maker.

Like it or not we are all in Sales.

If you disagree, try not writing up a sale and see how much business you do. Selling is not bad. Selling is good. Some of you seem to think that if you have to sell what you have you are a crook or some such. Not True. Selling doesn’t mean lying.

That was my disclaimer:

Now that we’ve established that we do sell things I have to tell you that anyone can sell anything to someone who doesn’t intend to pay you.

OK, read that again and let is soak in. It is important that you understand that sentence.

Got it? Now, next…

If you do not require a deposit or at least payment on pick up you are only fooling yourself. Your customers are not coming to you for your knowledge or your superior product if you allow people to pay you later. They are coming to you because they don’t have to pay you. Put your ego aside and let them say no when you ask for money. You’ve done yourself a favor. Try going to McDonald’s and asking them to allow you 60 days to pay for your Big Mac. Go to your local grocery and ask them to give you 60 days to pay for your groceries. Home Depot, Lowe’s, Car Dealer, Department Store? Go out and find a place where you can buy golf clubs and pay them in 60 days. Go out and find any product you can pay for in 60 days.

Chances are that if they want 60 days they will not pay you in full then either.

Word will spread if you allow terms and you will get every dead beat in town in your shop. You will think you are doing great and all you have is a lot of hopes and promises.

The more the customer pays the less they complain.  The sooner they pay, the less they complain

If they want a loan, send them to an expert that is prepared to check their credit and who does loans all day every day. Send them to a Bank.


E-Mailed through AGCP Google Groups, September 21, 2009

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