Are you struggling to hit your sales goals because of your pricing strategy? Do you feel like you're not making enough profit from some of your products? If yes, then it's time to consider using Average Unit Retail (AUR) to help you optimize your pricing strategy.
AUR is the average selling price of an item, calculated by dividing the total sales in dollars by the number of items sold. It's commonly used to compare sales across different departments or categories. But AUR can also help you make strategic pricing decisions for your online boutique.
Here's how you can use AUR to optimize your pricing strategy:
- Identify Your Most Profitable Products
Not all products are created equal. Some products may sell more frequently than others, but they may not necessarily be the most profitable. Using AUR, you can identify which products are generating the most profit for your business. This information can help you prioritize which products to focus on and adjust their prices accordingly.
For example, if you sell sweatpants at $19.90 retail price but your AUR for the year of 2022 (for sweatpants) was $15.70, you may want to consider adjusting the price to increase your profit margin. On the other hand, if biker shorts have a higher AUR, you may want to focus on promoting them more to increase sales and profits.
- Consider the Seasonal Trends
AUR can also help you identify how seasonal trends affect your pricing strategy. For example, if you notice a decrease in AUR for certain products during a particular season, it could mean that the market demands a lower price point during that time. Understanding seasonal trends can help you adjust your pricing strategy accordingly to stay competitive and maximize profits.
- Evaluate Your Sales Goals
When setting sales goals, it's not just about how much you want to make in total. It's also about what percentage of sales will come from each product category. AUR can help you evaluate your sales goals by identifying which products are contributing the most to your sales and profits. This information can help you adjust your sales goals and pricing strategy accordingly.
In conclusion, using AUR can help you make more strategic pricing decisions for your online boutique. It gives you insight into which products are the most profitable, how seasonal trends affect your pricing strategy, and helps you evaluate your sales goals. By optimizing your pricing strategy with AUR, you can improve your profits and overall business success.