First Price Right Price in Thrift
The Right Price Isn't Usually the Cheapest Price
A great art in thrift retail is pricing. Regularly getting it right the first time is high art. It’s always a balance, good value for the donation, and good value to the shopper.
An important metric in retail, no matter the type, is turns. The number of times inventory is turned over in a year. Sell it fast and cheap or slow and for the most possible.
The right price isn’t always the cheapest price.
80% or so of donated goods are easy to price. Most clothing, toys, games, dishes, and so on have a pretty predictable value. Even with these picking up an extra fifty cents or a dollar here and there adds up over time.
The labor cost to get an item to the sales floor is about the same whatever you sell it for.
A huge red flag is when very little of a category is ever rejected at the end of a color cycle even though a good amount goes to the sales floor.
In one place I regularly saw pots and pans coming through donations but there wasn’t ever much on the sales floor. What was there was generally well past its prime. At the time we didn’t have the technology to track sales at a granular level.
We eventually figured out that we were not pricing based on quality. The big-box Black Friday pots and pans were priced about the same as OXO. We trained on how to identify quality and learned we could charge substantially more for better brands. They didn’t all sell the day they went out, but they seldom made it to the markdown in color rotation. That little change added one or two hundred dollars a week to sales. Small improvements like those multiplied over time and across categories turn into real money.
The flip side is also true, too much being rejected at the end of a color cycle is an issue as well. The price is too high or too much is sent to the sales floor. Either way, it amounts to a waste of space and labor. Some experimentation is in order when this shows up.
When a lot of professional resellers are shopping and buying regularly it’s because they are finding plenty to mark up and resell.
I confess to being torn about this. On one hand, small business people are working hard, earning a living reselling thrifted goods. Yay. On the other, as the operator of non-profit thrift stores, I was missing revenue that could go to support the cause.
It’s that hidden value that makes the difference in how profitable a thrift store is.
A few real-life examples:
A sad-looking Monopoly game that turned out to be from before WW 2.
A ring of platinum and diamonds mixed in with costume jewelry
Lladro figurines
Vintage Pioneer Tube Type Receiver
Chanel Leather Purse
Martin Guitar
Don Lagerberg painting
The list could go on and on
All these were mixed in with run-of-the-mill donated goods. The Monopoly game, for example, that was almost tossed in the trash a couple of times sold for over $600 because someone paid attention.
It doesn’t take a smart merchant to sell a lot of stuff cheap and fast. Business people managing a donated asset will find those profit dollars hiding in plain sight.
First price right price means that the original price is likely to sell that item in a standard time frame. Not necessarily day 1, but before an automatic discount cycle.
Today’s Quote:
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