Industry sector: Retail and wholesale

Record shop: Pricing policy

Most suppliers of new records recommend a retail price for each title but it is up to you whether or not you stick to it. You will find it difficult to charge more for chart albums than your competitors do, but you may be able to add value to more obscure and hard to find titles. If you stock both formats, it's likely that you'll charge more for the same album on vinyl than on CD.

Getting the price right is very important. You need to make sure that the difference between the cost price and the selling price leaves you enough to cover all of your operating costs, including your own drawings. Due to increased levels of competition that has driven down retail prices of recorded music, average profitability of record shops has steadily fallen in recent years.

Having 'bargain bins' can be an excellent way of clearing out stock that has reached the end of its shelf life (for example, a single that has gone out of the charts and receives no radio play). As the alternative with some of these titles is to discard them, you could consider setting very low prices for items offered in a bargain bin.

If you intend to specialise in a 'niche' area of the market, it may be that your prices won't be affected by what your more mainstream competitors charge as they don't stock the same range as you. If this is the case, you can charge what the market is prepared to pay.

If you plan to sell secondhand titles, make sure that they are priced high enough for you to cover your costs but low enough to encourage people to buy them rather than buying new. Some of the secondhand titles you sell may be collectables, in which case the selling price is likely to be considerably higher than a comparable new title. Setting the price of items like these may require some detailed research.

If you use auction listings to sell music and other items on eBay (and similar online marketplaces) then you'll need to decide whether to set a minimum price using a reserve or a starting price, or whether to let the auction run from a low start and allow the market to decide the final selling price completely. To avoid this uncertainty, you may decide to just use fixed price listings.