There are many outside influences that affect profitability and a retailer's bottom line. Setting the right price is a crucial step toward achieving that profit.

Retailers are in business to make a profit, but figuring out what and how to price products may not come easily.

There are two costs associated with products that you must know before you can determine the best strategy in pricing your products. These are the COST OF GOODS and the amount of OPERATING EXPENSES.

The cost of goods includes the amount paid for the product, plus any shipping or handling expenses. The cost of operating the business, or operating expense, includes overhead, payroll, marketing and office supplies.

Regardless of the pricing strategy used, the retail price of the products should more than cover the cost of obtaining the goods plus the expenses related to operating the business. A retailer simply cannot succeed in business if they continue to sell their products below cost.