How much is a good margin for a retail store?

Nothing s more a commodity than a vacuum cleaner.

We bundle, and call the bundle by a name that they can't shop. We also include free services that they could never get online (or from a competitor)
This bundle of free services is the best thing we do to keep people buying in our store.

When we advertise, we show models they can't buy online...because that's when they go online to compare. Occasionally I'll stick a model in that they can shop online...and sell it at cost....or even less, just to make the rest of the items look like a better deal.

Think of a lumber yard. They advertise 2X4s at cost, or even less. Why? Because that is the most common thing people shop prices on at a lumber yard. If you have a good price for 2X4s.."your prices must be pretty good on everything else".


Also, I never give model numbers in ads. That's suicide. Because the model number is what gets shopped.

Hope that helps.

Pretty good advice here. Yeah, sometimes I find a product that I bought for $45, and sold for $99...from the source, for $8. I just buy in quantity and keep selling for $99. And of course, call several buddies that own stores and offer the product to them for $25. I've done that with several items.

Would the place in Wooster be called Friendly Wholesale?

Silly Rabbit.

My new theory is to dream up a price that will get me on "60 Minutes" for raping the public...and then I add 10%....

OK. Really. The percentage is immaterial. How much do you make in net profit per month? If raising the price, increases that figure...that's good. If lowering the price increases that figure...that's good.

I had a friend that had a furniture store,and he was doing about $2,000,000 a year in sales, and netting about $200,000 for himself.

I said "If I showed you how to instantly double your income, with no additional work, and no additional sales required...would you do it?"

He said he would. I said "Raise your prices by 10%. Your customers will never notice, and you'll double your net income"

The um...moron said "I can't raise my prices, I have the lowest prices in town".

I said "I know. But you have the lowest prices by too much of a margin. Raise the prices by 10%, you'll still be the cheapest (the worst market position to be in), and you'll double your money."

Nope. Too complicated. But I didn't give up.

"OK, then let me help you get new financing. You're paying a 5% reserve on every finance contract. You'll never get that back. I'll increase your annual net by $100,000 this week. No charge. As a favor."

Guess what? "Nope". He said that it was a cost of doing business.

I knew what he was paying for everything (we almost became partners at one point). I told him that a 20% dip in sales would kill him in a few months. He wouldn't be able to make payroll, he had to increase his sale prices. Nope.

The only thing he had going for him was that he genuinely had low prices on popular brands of furniture. But they were 30% lower than the stores I shopped (looking for comparables). I said "You know..20% less than everyone on Earth is still OK". Nope.

He eventually had to close his store. He called me last Friday looking for a job. That's the only reason I remembered this.