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If Albert Einstein had been a retailer, “lower prices = more gross profit dollars” would be the E=MC2 equation for Control Label Products.  This reality is the crucial equation retailers use when determining SRP’s for control label. If you cannot make more penny profit selling control labels, why offer them at all?  The answer is to employ a pricing strategy that makes certain that control label products has equal or greater gross profit pennies than the equivalent national brand – this ensures profits.  This strategy will still allow a discounted SRP for the consumer.

 

In the example below, the consumer gets twice the quantity of “product” than the national brand and saves $1.00 by purchasing the VIG product.  The retailer makes $.55 additional penny profit on this transaction.  E=MC2!
Many control label products offer more “product” than the comparable national brands.   The competitor and VIG “product” is one example.  The cost structure for these control label items is still significantly lower than national brands.  No wonder consumers continue to purchase larger unit quantities of control labels!
The reason both unit and dollar sales increase in categories with control labels is that we are capturing two consumers: the Value Shopper and the Educated Consumer.  Control labels which lower retails clearly satisfy their needs.


UIN DESCRIPTION YOUR COST CUSTOMER COST RETAIL GP% PENNY PROFIT
077974 Competitor “product” $2.84 $3.55 $4.49 20.9% $0.94
927145 VIG “product” $1.60 $2.00 $3.49 42.7% $1.49
Note:  Assumes a customer markup of 25%
 
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