Pricing products for hotel retail

List every cost

The purchase price is only the start. Add freight, taxes where applicable, packaging, labour to display and restock, shrinkage from breakage and loss, and any payment fees. Illustrative example: if a product costs a certain amount to buy and you add a handful of smaller costs, the real cost may be noticeably higher than the invoice.

Write this as a simple table. You will use it every time you price a new line.

Include the cost of stock that does not sell. If one in ten items is lost, damaged or expires, spread that cost across the other nine. It is dull arithmetic, but it prevents surprises.

Choose your margin approach

Two common methods are a standard markup (cost multiplied by a fixed factor) and a target price point (decide a price then check the margin). Hotels often use the second, because guests think in round prices.

Illustrative example: if the landed cost is 400 and you aim for a margin of 50 per cent on selling price, the price is 800. If the nearest round price is 799, check the margin still holds. Use your own figures and taxes.

Remember that a margin is not profit. Rent, staff time and display cost take a share. If your shop is a corner of reception, those costs are small, but they are not zero.

Think about price ladders

Offer a ladder: an entry item, a core item, a gift item. The gap between steps should be clear. A buyer who does not want the top price can see a sensible middle. See hotel retail for ranges that are built in layers.

Round prices to a number that is easy to pay and remember. Many hotels prefer a figure ending in 0 or 9, depending on the market. Be consistent across the range.

Bundling and sets

Bundles can raise the average spend. A set of three items at a price slightly below buying them separately feels like a fair choice. Check the margin on the bundle, not just the single item. Make sure the contents are balanced; a set with one strong item and two weak ones looks padded. See gifting for set ideas.

For example, if three single items sell for a set total, consider selling the set a little below that total and making sure the box and card are included in your cost. If the set is slow, check whether the contents are right before cutting the price.

Compare, but carefully

Look at what comparable items cost in nearby shops and online. Guests will compare. You do not have to match, since location and convenience have value, but a price that is wildly higher needs a reason such as exclusivity or presentation. Avoid naming other brands on your signage.

Visit two or three shops a month and write down comparable prices. Take photographs of shelf layouts too; display style affects what shoppers are willing to pay. Then discuss with the team where your range sits and why.

Review and adjust

Review prices every quarter. If an item sells out quickly, consider raising it slightly. If it never moves, check location and presentation before cutting the price. Keep a note of each change and its effect. Do not run constant discounts; they teach guests to wait.

Staff should know the price logic so they can answer questions.

Keep a simple price log: date, product, old price, new price, units sold before and after. After a year it is a reliable guide to what your guests will pay, and a useful record for new managers.

Small details

Display prices clearly, include taxes in the displayed price if required in your market, and offer a simple way to pay at reception. Keep a price list at the desk. When you need a supplier quote for volume, ask for samples and a price sheet.

Finally, keep your price list in a single file and update it in one place. Several versions on different desks create errors, and a wrong price on a gift set is awkward to correct in front of a guest.

Questions on this topic

What margin should hotel retail aim for?

It depends on your costs and market. Calculate your landed cost and decide a target that covers overheads and shrinkage.

Should prices include tax?

Follow the rules in your market. Many shops display tax-inclusive prices, but check locally.

Is discounting a good idea?

Occasionally for clearance or events. Constant discounting reduces the perceived value.

Keep reading

Looking for supply? See Hotels & resorts, browse the product range or request samples.