You're Not Charging Enough {New Boutique Owner MUST READ}
Mar 20, 2020
The store down the street charges less than me for the same items! I could NEVER charge 3x wholesale or 65-75% IMU! People would NEVER pay it.”
**THIS IS A MINDSET ISSUE!!!**
First of all… YES THEY WILL PAY IT. As I’ve talked about so many times, women buy from women. If your customers like you, most likely, they won’t be going into the store ‘down the street’ and will never notice. Also, if they love you, they would much rather pay an extra $10 to support you and your boutique!
Second, many boutique owners say to me “Well I only paid $10 for that top.” Customers have NO idea what you pay for your merchandise! Also, you aren’t factoring in alllll the other costs that went into getting that top to your store. Your trip to market, your great taste level, the roof over your head, your time spent searching, unpacking and ticketing it (or the person you paid to do that!) There’s SO MUCH MORE that goes into pricing then just that wholesale cost.
Lastly, this is YOUR MONEY MINDSET. If you don’t value your work and your boutique business, you are in MAJ trouble. I always KNEW that the merchandise I was selling was 100% worth the price I was charging. I did keep an eye on pricing in stores I knew my customers also shopped, but honestly, it was just me confirming how on point my pricing was!
Because I came from vertical corporate retail (meaning we made all the goods we sold!), as a merchant my margin targets were normally closer to 80% (4-5x wholesale). THAT is what my BONUS was based on— hitting my seasonal sales targets at what I often considered an ABSURD margin. But, I’ll say- I learned quickly to get with the program… Those companies were VERY successful and made a TON of money selling great products that customers loved.
When I opened The Fashion Truck, I didn’t know any difference then that 75-80% (4-5x wholesale) target! Only after about 3 years did I hear the word “keystone” (which depending on who you ask, means 2.0x-2.5x wholesale margins)! I had no idea what it meant. And when I heard that people were using that as their pricing… I was SHOCKED. HOW could they be in business? I thought my 3-4x margins were low based on what I had experience in my corporate world!
Truth is… 2.0-2.5x wholesale pricing is TOO LOW. You don’t have room to markdown, you will end up in debt and most likely out of business. You can believe me now, or later, when you probably won’t be able to dig yourself out of the mess of not charging enough has created. SO MANY boutique owners have come to me saying “I wish I found you sooner.” Often, because they are in that jam of low margins and not enough cash in the bank. Oh, and selling more doesn’t really solve this problem… you can’t sell your way out of bad margins.
If you read this entire post and are still thinking: “But Emily, you don’t understand! <INSERT EXCUSE HERE>!” Girl, you need a Mindset Makeover! I hate to be the one to tell you this… but I’m probably the ONLY ONE saying it, and I’m ok with being that person. I was you— full of money mindset issues that I never knew about. Until 2015 when my world got rocked and I went straight down the rabbit hole of “I’ve GOT to fix this!”
Are you ready for your MINDSET MAKEOVER? You probably want to sign up for Boutique Basics Bootcamp. This is my 7 week training course for new and new-ish boutique owners. I go in depth on how to identify what’s wrong in your boutique business and teach you how to fix it so you can grow your revenue quickly! Get all the information here: www.boutiquebasicsbootcamp.com and add yourself to the waitlist!
**Boutique Basics Bootcamp will be available for self study in May 2020**