Pricing To Make A Profit

This is a guest post by
Billy Farrell,
Assistant Director of Retail at Chest, Heart & Stroke Scotland


The finances of the population of the UK are being increasingly stretched. The Office of National Statistics recently revealed that consumer price inflation had been the highest since 1992. Our disposable income is being squeezed tighter and tighter from tax rises, energy price rises, food price rises, travel price rises and most other things we pay for as these rises affect businesses who have to pass the cost to the consumer. The money in our pockets to spend on clothes and homewares is disappearing. However, for charity retail, the pressures on people’s finances provide an opportunity for growth if a clear strategy is designed for pricing.

Making money go further

After the financial crash of 2008, the years of austerity that followed drove more people to buy second-hand clothes due to the very economically friendly pricing structures. Back then, people were already considering the environmental impact of the clothing industry and how recycling and reusing clothing was more sustainable than always buying new. However, with funds being stretched, like they are now, people found a way to make their money go further in the world of charity retailing.

As much as there was a growth in new charity shops opening and an increase in sales, the profit levels did not grow in unison. Third sector retailers are not immune from the rising costs. Our charities have rent, rates, utilities, consumables, transport, staffing, taxes, pensions to pay, just like all other reputable businesses. However, our mainstream competitors ability to set prices on every item to deliver a profit is far superior to ours. To make the most of this next growth opportunity coming our way, we must have a strategy to raise prices to stay ahead of the rising costs.

Average prices count

With the average transaction value in a charity shop only £4.89 (2019), this is a fantastic offer for the customer, but there will be challenges for charity shops to remain profitable with it remaining this low. There are many options to mitigate against the rising costs, but a pricing strategy can be implemented immediately with no cost.

Pricing in a charity shop is a balancing act. Price is too high, and you may sell less. Price is too low, and you need to process even more to keep up with the demand. There is always an argument for what constitutes “too low” and “too high” as this is subjective without good data. A professional POS system that captures categories and their selling prices will be vital to creating a robust pricing strategy.

A new strategy

There are many ways to design a strategy to price for your store’s area. Every charity will have its way of doing this, but if all stores are on board and follow the strategy, the whole organisation will influence its profits.

To increase prices with confidence, have great store standards, provide excellent customer service and know your products. Having quality brand names on the shop floor in good condition drives more donations of the same ilk. Donors are more likely to drop in the best items to stores they know will be treated with care, where they will achieve a good price for the charity and are thanked for the donation.

Visit competitors in your area, both charity shops and mainstream retailers. See what is currently fashionable and take note of the prices. Be confident in pricing higher for the items you know are on-trend. Your customers will still be getting a bargain without you giving it away.

The challenges facing us are significant, but sound commercial decisions will influence your beneficiaries’ profit.

Good luck with the new season.

More About Us

The Charity Retail Consultancy helps charity retailers and other non-profits (including museums and galleries) develop their retail operation, improve their product offer and people, and improve their profitability.

The Charity Retail Academy provides online & face to face training developed by charity retailers, for charity retailers. We work in partnership with the Charity Retail Association to deliver Charity Retail Learning to their members and beyond.

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