Pricing by sales velocity and demand
Two products with the same cost and the same markup can behave very differently. One sells ten units a day, the other one a month. Pricing them the same way leaves money on the table with the first and ties up attention with the second. Sales velocity, the number of units sold over a period, is a simple signal that helps price them differently.
Measure velocity correctly
Measure velocity over a fixed window, such as units per week or per 30 days, and compare the same periods. Leave out days when the product was out of stock: an item that was unavailable for half the month did not sell slowly, it could not sell at all. Keep promotions separate too, since sales during a discount tell you about the discount rather than normal demand.
Finally, compare products within their category. "Fast" for furniture and "fast" for phone cases are very different numbers.
Turn velocity into pricing decisions
Fast movers
Popular products are usually also the most compared. Keep them competitive, but test small increases: if sales do not drop after a 2–3% rise, the extra margin adds up quickly at high volume.
Steady sellers
The core of the catalog. Price them with standard category markups and review them periodically against the market.
Slow movers
When the product comes from a supplier's warehouse, slow sales cost you little, so a lower price is not always needed. When it is your own stock, a gradual reduction frees up money and space. Set a floor so the discount does not go below cost.
Seasonal products
Demand rises before the season and drops sharply after it. Higher markups early in the season and planned reductions at the end work better than reacting late.
Combine demand with supply
Demand is only half of the picture. When only one supplier still has a product in stock, the market price tends to rise. When many suppliers have plenty of it, competition pushes prices down. Watching supplier stock alongside your sales helps anticipate both.
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