What is a reasonable discount for a closeout floor model?

[drcollie]

I've been doing this a long time and there is nothing more I dislike than getting into price haggling with a customer, so I don't do it. Pricing is nothing more than mathematical projections anyways. I know as a store owner that in order to stay in business and be able to pay my own house mortgage and send my kids to college, that I have to have a certain percentage profit from the business each year. In order to get a net profit of 'x' I have to have a price margin that reflects 'y'. The only real variables that enter into it are costs of doing business (controllable) or volume of sales (not controllable). Good years are when the volume is higher than expected, bad ones are when they are not.

So, once you know the above there are two ways to decide how to market your business in pricing. One way is to put high prices on things hoping to snag a few customers who don't price shop, and then barter with those that are more savvy. The other way is to flat line price everything and that's all there is to it. I choose the latter for my store, because I don't think the nice lady that wants to buy a sofa should have to pay more than the aggressive young attorney who thinks he can negotiate everything.

So, first you have to determine what kind of store you are dealing with? A high/low store or are they a flatline price one? That's where you have to do your homework on price/value ahead of time. Because if you go into a flatline price store and try to negotiate, you're going to be frustrated at the lack of cooperation and probably not buy from them. It puts you and the store personnel in adversarial positions.

I never mark things down below my established price unless the item becomes damaged, heavily shopworn, or the manufacturer drops the model, or unless I decide at some point to drop that maker's line of goods.

My best customers don't beat me up on price. They stay with me for many years and value the service I can offer them and are the ones I will really go out of my way for time and time again. Those that shop price alone are never loyal customers and tend to be one-time purchasers.

[JMM]

My research leads me to believe that I'm dealing with more of a "flat line" store.

I went to a "going out of business" sale for a high-end store here that is closing its doors and liquidating its inventory. The prices marked are ridiculously inflated and then they are giving 10% or 20% off. The net result is the prices are still higher than the prices that their competitors ask for the same or similar models.