12 Terrace Review — Wednesday, February 3, 1988 Business Beat 2 ar oe retail price takes | carefulthought | _ Effective pricing is vital to the success of your retail business. What your customers buy often depends on the price you charge. How much your customers buy affects the profitability of your store. - Simply, retail pricing is defined as apply- ing a selling value to merchandise for sale. To set the right price — one that is both at- tractive to customers and allows you to make a profit on the transaction — you must stay competitive, yet ensure that your selling price more than covers you operating and selling costs. oo by Phil Hart! Manager, Terrace Federal Business Development Bank Markups and Margins As aretailer, you will often use two important terms: markup on cost and margin-on-selling, It is essential to understand the dif- ference between them when you are setting your selling prices. Markup is the difference between the cost of merchandise andthe | retail price. The cost of merchandise is the base invoice price minus quantity discounts, plus any freight or duty charges. Cash discounts offered by the supplier for early payment of the invoice are not deducted in the calculation of merchandise cost. To calculate markup-on-cost as a dollar figure and as a percen- tage, retailers use the following formulas: @ Dollar markup equals retail price minus cost of merchandise. ‘@ Percentage markup equals dollar markup divided by cost of merchandise. oe On the other hand, margin-on-selling is a calculation that ex- presses dollar markup as a percentage of your retail selling price. . The formula for this calculation is: @ Margin-on-selling equals dollar markup divided by retail price. a ‘Establish Markups Before setting prices for your goods, it’s important to determine typical markups for the type of merchandise you will be selling. You can learn about these markups by referring to trade journals, sup- pliers, retail associations, wholesalers, non-competitive retailers, and accountants. A specific markup value cannot be adopted for your merchandise until you determine whether or not this markup will generate a pro- fit at the expected sales level. In other words, is the calculated gross trading profit sufficient to cover all of your operating and selling expenses and still leave a satisfactory profit? is the Markup Right? To determine what markups your business can afford, you must forecast your annual sales and operating expenses, then calculate your cost of goods sold. The difference between your sales and cost of goods sold is your gross trading profit. Subtract your expenses from that figure to obtain your expected net profit, and decide whether or not your operation is viable, If your net profit is not adequate, you will need to take steps such as reducing expenses, limiting your draws from the business, or changing pricing policy or product mix, Even if your business is viable at the markup you have established, you will need to remain flexible and adjust to changes in the marketplace. While pricing can be something of a trial-and-error process, careful forecasting and planning can help you minimize errors early in the game. Business Improvements program gets $10 million [Quick and easy... ‘TERRACE BUSINESS GUIDE West Coast Chimney Service | Clean Chimney Maintenance. 4 ' Dealer for: ©. FINGARD CHIMNEY FIRE EXTINGUISHERS | _ ee 635-9557 Pro TECH ELECTRONICS Thornhill Grocery & Laundromat iy. % Open 7 days a week 8 a.m, - Tl p.m. © . * Fresh meat cut daily —_ % Fresh praduce ‘Take-out’ foods - *& Stamp Agency - 635-6624 across from Thornhill Elementary — KALUM ELECTRIC 4519 LAKELSE AVE., TERRACE _ Major Appliances: 635-51 34 Frighaaire Electrohome Complete electronics Sores & gevvice Quasar TV, repalr services : Parts Depot We service Service centre for most HAs ai for all makes all makes major brands fy TECH 9234 Kalum St, : _ Satelite TV systems Kalum Electric Ltd. - Your.complete - | oe ‘source for all CONTRACTING your heating | n eae’ , h Commerc & Residential Construction ainte! é, Hepalrs enovalions orthwest Consolidated marc ropes Sarton 5239 Keith Ave,, Terrace 635-7158 Aen MOUNTAINVIEW AVE. 635-5859 - TOT AL _ Specializing Its BUSINESS SERVICES i Axe ane ic * eects enter seer ve Konanasen 638-8195 North Coast Auto #1-3238 Kalum St. Terrace, Repairs Led 2220, 5uyer Ore Terrace B.©. VAG 2N4 inflatable Boat Repairs TERRACE LTD. Rl Durable — High Quality %, < Vulcanizing Repairs So Ff 4711-A Keith Ave. “p We specialize in Convaver. cat Og Mog , - nstallations, Splicing, and Repairs. Auto Glass Specialists Vuleanizing and Pulley Lagging. * 'S —_ 24 HOUR SERVICF ICBC claims handled promptly HI-QUALITY BELTING & 638-1166 CONTRACTING SERVICES | 638-0663 f 638-8530 MERC CRUISERS % MARINER OUTBOARDS HAMILTON & OUTBOARD MARINER JETS HOMELIGHT LAWNMOWERS 638-1876 industrial ; Commercial & ™ YAMAHA 3 & 4 WHEELERS Residential AW DL No. 7550 & POWER PRODUCTS Wi ring ~ KEN’S MARINE — 4946 Greig Ave. Phone: 635-2909 B&G GROCERY Nate’s Electric Nathan Waddell — Electrical Contractor 4031 Lazolle Ave., Terrace DOC’S CARTAGE AND STORAGE CO. (1984) LTD. Agents for United Van Lines New legislation permitting B.C. municipalities to form Business Improvement Areas has been announced by Municipal Affairs Minister Rita Johnston. According to John- ston, the intent of the new legis- lation is to assist downtown cores and key business areas in becoming morecompetitive, and it is seen as’a potential unifying force in the business communi- ty. _.” Johnston said the legislation is a part of the new Downtown Revitalization Program and will allow: B.C. municipalities to designate Business Improvement Areas, where local merchants can voluntarily levy a predeter- mined. amount against their ‘business through the municipal - tax system. — “She explained that this will create a pool of funds that can be used to improve the commer- cial viability of the area by.coor- dinating management and pro- motion. She added that since its incep- tion five years ago, Downtown Revitalization has provento bea | boost to local economies avound the province. ministry has completed a study of the program which revealed a significant impact in terms of job creation, new businesses and sales in downtown cores. “The Business Improvement Area concept is a very @ap- propriate addition to the revitalization program, which was recently recharged with a $10 million revolving lottery fund. The legislation will allow merchants to join each other and the province in making a sound investment in She said the the future of their area,’ she concluded. .. across town or across ihe nation. .635-2728 3111 Blakeburn St., Terrace, B.C. In Kitimat — Phone 632-2544 Laundromat & Carwash Open 8:30 - 10:30 dally 27015. Kalum 635-6180 Sales and Service for Motorcycles x Chainsaws Snowmobiles * Marine Supplies TERRACE 4 EQUIPMENT SALES © LTD. 4441 Lakeise Ave., Terrace Ph. 635-6364 Contact Terrace Review . 4535 Grelg Avenue, | 635-7840