Manage Your Pricing

There is a saying in retail that you make your profit in buying, not in selling. And it’s true.

“Our sales focus should be on products we can buy at a better price than our competitors, and we shouldn’t promote products we know our competitors buy at better prices than we do. ”

What does it mean for the flooring retailer? It means two things: first, our sales focus should be on products we can buy at a better price than our competitors, and we shouldn’t promote products we know our competitors buy at better prices than we do. Second, we need strict controls on the prices our salespeople can charge and the discounts they can offer. If we don’t have those controls, our salespeople will erode our profit advantage.

Let’s talk about managing our pricing.

Give Your Highest-Margin Products the Best Position

If you carry a product in stock, if a supplier has given you exclusive access to a product, or if a product offers attractive rebates, these should occupy the best display area in your store, and this is where you want your salespeople to sell from first. If your suppliers want to get their products into this area, they need to give you a good reason to include them.

Refresh Your Display: Drop the Dead Weight

Regularly identify products that are not selling and remove them from display, reducing clutter in your store and giving you more space to display larger samples of the products that are selling. Similarly, identify products that you are quoting, but not winning. When this is the case, someone in town has a better buying price than you, and you are better off filling that space with samples of a comparable product you can sell as an alternative.

“Fixed pricing based on job size gives your salespeople a structure to work within and ensures consistent pricing. ”

Use Structured Pricing for Consistency and Profit

Fixed pricing based on job size gives your salespeople a structure to work within and ensures consistent pricing. Aim for multiple price levels that reflect job scale (house lots versus single rooms) and job type (residential versus builders), each with its own realistic profit expectation.

Stop Uncontrolled Discounting – Protect Your Margins

“If a price needs to be discounted to win a job, it should always be done “in consultation with the manager”. ”

Salespeople should not have the authority to deviate from your price levels. If a price needs to be discounted to win a job, it should always be done “in consultation with the manager”.  This approach makes the concession feel like a genuine exception for the customer. If a salesperson can simply drop the price when asked, it creates the impression they were overquoting from the start.

Build an Invisible Margin Booster into Your Costing

One of the most effective ways to add profit to your bottom line is to apply a modest internal profit buffer before your salespeople add their margin. This is typically an overhead factor of 1–5% added to the costs they see for products and services.

“Across a $3 million business, that 3% internal rebate delivers an extra $45,000 in annual profit.”

For example, in a business using a 3% internal rebate, a carpet costing $100 would appear as $103 before the salesperson applies their margin. Across a $3 million business, that 3% internal rebate delivers an extra $45,000 in annual profit.

The sweet spot is usually 3–5%. Increase it gradually to avoid any impact on your conversion rate.

Make Sure Stock Buys Actually Deliver Extra Profit

You usually buy stock because it gives you a better cost price than cut-length purchases. However, holding inventory brings extra costs, so you should load the cost by at least $5.00 per unit (per square metre or lineal metre, depending on the product). This helps cover warehousing, samples, and shrinkage.

If you secured the stock at a particularly good price, increase the loading accordingly. Without this adjustment, your salespeople will simply apply their normal margin to a lower base cost, defeating the purpose of carrying stock. If a stock line can’t carry a realistic load and remain competitive, it may not be worth buying in the first place.

Implementing these strategies, from prioritising high-margin products in prime display areas to enforcing structured pricing and smart stock loading, can significantly strengthen your bottom line. Many flooring retailers find that accessing the right data and automating these controls turns good intentions into consistent results.

Specialised tools like RFMS are designed specifically for the flooring industry and make it much easier to track product performance, manage price levels, create internal rebate, and monitor quoting success rates without relying on manual processes.

If you’d like to explore how these ideas could work in your business or see practical ways to put them into action with the support of purpose-built software, we can arrange a short online demonstration tailored to your business.

Chris Ogden is a consultant and Managing Director of RFMS Australasia (rfmsANZ.com), a supplier of IT solutions specific to the flooring industry. Chris has an extensive background across all aspects of the flooring industry and can be contacted at cogden@rfmsanz.com.