Updated: Sep 14, 2020
Inventory pricing is one of the strategies, that helps you eliminate wastage of products as well as time. With the right pricing and accurate count of available inventory, you can now prevent running out of stock and know when to reorder products.
A properly managed inventory can give you the benefit of keeping your warehouse organized. In turn, it can help you in providing your customers with your highest selling products without wasting storage space. Not only will this speed up your fulfillment process, but it will also retain your customers and their satisfaction.
Find the right inventory pricing
To make sure you are selling your product at the right price; it is important to keep a check on the costs incurred in the process of making that product available. Main inventory costs can include your ordering, carrying and stock-out costs. These can be found through data that is already available and can be divided by the actual price of the inventory and its yearly trail earning.
Choose a suitable pricing strategy
Out of the various inventory pricing strategies, which include premium, skimming, time/value-based, penetration etc. Choose the one that sits well with the product category you are offering. It is important to ensure that strategy being chosen is not restricted to a certain category and allows flexibility.
In accounting generally, a choice of two inventory systems is offered, Perpetual and Periodic inventory system. Inventory systems can help in keeping a track of your goods and are an essential part of your inventory pricing. The difference between the two is not more than how often the data is updated, however, with the help of either you can turn the cash conversion cycle in your favour.
Another feature that can allow you to determine your inventory pricing is the inventory method you choose. LIFO (Last in First Out) and FIFO (First in First Out). As there is always a margin of prices increasing, businesses usually use the LIFO method. It allows them to sell products bought for a lower price at a higher price than estimated while buying it.
However, it depends on the products you are offering, and whether they can be stored for a longer time or are perishable. FIFO is a better option in terms of accurate costs. It assumes the sale of older brought items is sold first on a less-costly price.
Involving the use of devices like bar code scanners and efficient inventory management software can boost your productivity in term of calculating inventory pricing. These devices can eliminate human error and employees will be able to focus on tasks that require manual assistance.
Using the right resources can make inventory pricing easy if used with the right techniques. Therefore, x2xecommerce.com brings you an inventory management system that is your all-in-one solution.
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