Monthly Archives: October 2014

Buy Outright Pricing versus Consignment Pricing

Many NextGen clients are beginning to buy items outright, either selectively or completely.  Perhaps this is in responseto an increasing number of women’s resale “Buy Outright” stores or in an effort to improve sales margins.

The most common question about buying outright is, “shouldn’t we lower our prices to be sure they sell?” …and, by extension, shouldn’t NextGen have a set of lower price points for stores buying outright?

The answer to both is, NO!

It all has to do with your “Pay Price” which is how much you pay to have an item for sale.

  • The Pay Price for most consignment stores is 40-60% of the selling price paid to their consignors.
  • The Pay Price for most buy outright is 20-40% of the selling price paid to the seller of the item.

The lower Pay Price and higher sales margin of buying outright provides for any loss associated with items that don’t sell or sell for less than what the store originally paid for them.

It’s the buying or Pay Price not the selling price that needs to be reduced when buying outright.  While the temptation is to lower the selling price to gain the sale, the right strategy is to be more selective in what you choose to buy.   Bottom-line, the right price for an item depends on the market for it, not how it was acquired.

Takeaway Tip:  Many owners moving from consignment to buying outright often start with selected consignors, customers with items likely to sell within the consignment period.

Note:  NextGen Pricing systems are always calibrated to market, variously based on sales history, demographics, competitive landscape and strategy.