Cost Calculation in Retail Merchandising software
Preparing your retail merchandise for sale is a multi-step process that begins in acquiring the products themselves. Once you have decided what you want to sell, how much of it you want to sell, and where you want to sell it, the next step will be figuring out how much it should cost. Pricing will have a huge effect on the popularity of your product and the profit you make off of it. Retail management software comes equipped with a number of components designed to help you through this decision-making process, but one of the most important and useful tools is the Cost Calculator found in the Retail Merchandising software.
What decisions should go into pricing something? You want to know how much it cost for you to get the product, and then you need to decide on your IMU (Initial Mark-Up). This will dictate on a simple level how much profit you will make per unit when it’s sold. This doesn’t take into account, however, costs such as labor payment and so forth.
What the Cost Calculator does is help you create an intuitive formula that can be applied to every order which helps you estimate appropriate costs. You can create an unlimited number of preset cost formulas that can be applied repeatedly to any order, which will greatly increase the accuracy of your cost estimates. The more accurate these projections become, the more likely you will be to find that “sweet spot” where the price is low enough to warrant people buying it and high enough for you to make a decent profit.
The Cost Calculator condenses some of the most important concepts in your business into one component by helping you analyze the input and output of your merchandising transactions. Be sure to accustom yourself with this tool when thinking about the pricing and costs of your products.