Chapter 7

The inventory pricing secret sauce


Pricing has a direct impact on the place your brand sits in the market and the way you value your inventory can affect your profits. When we talk about price and cost, there is a difference: 

  • Price refers to the dollar amount charged to your customer. 
  • Cost to the amount your business pays for your inventory. 

It’s important to know the difference as the miscalculation on total cost can affect your bottom line.

When you consider the total cost for your inventory, you should look beyond just what you pay for the goods. Make sure you consider the shipping charges, packaging costs and custom and duties fees.

Some merchants refer to these as “non-vendor” costs which means they are not included in the wholesale purchase price. Using inventory management software allows you to add non-vendor costs to any purchase order as a dollar amount or as a percentage so you can track it properly.