Step 10: Set Your Price

Meg-A-Nut Inc.

Vic and Suzette Brounsuzian

"We've got some items we mark up 75 percent, some we mark up 130 percent and we've even got some stuff we mark up over 200 percent," says Vic Brounsuzian, 44, who, with his wife, Suzette, operates a small shop selling dry-roasted nuts, seeds, fine chocolates and other products. The Brounsuzians' pricing strategy seems to be working well: Since opening day, the couple's walnuts, pecans, pistachios and filberts have become the hit of their Streamwood, Illinois, shopping plaza.

To determine appropriate selling prices for the items in their store, Vic started out by gathering extensive pricing information from suppliers nationwide for the products and supplies they would need. Once he had a solid sense of the costs they would incur, Vic and Suzette took to the streets of their community.

"We did a good deal of walk-through research, going to other candy and nut stores in our area to find out the prices they were charging for the items we would carry," Vic explains. "After gathering extensive information, we would consider the overhead associated with the types of stores we visited to determine the approximate markup being charged per item. We knew that it would cost more to rent a shop in an enclosed mall than one in an outdoor shopping plaza, so we figured that information into our calculations."

After that, the Brounsuzians established prices for all of the items in their store and eagerly awaited customer response. "The first year is all about learning your business and compiling a list of mistakes you've made along the way. A big part of that involves setting some prices and seeing how customers react," Vic says. "If an expensive product isn't selling, perhaps it's time to lower the price a bit, as long as you're still making enough money to cover your expenses while leaving some room for profit. If an inexpensive item isn't selling, perhaps a price increase would convey a more solid sense of perceived quality and value."

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This article was originally published in the March 1997 print edition of Entrepreneur with the headline: Step 10: Set Your Price.

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