Setting prices that entice customers while protecting profit margins is a delicate process in any vertical. However, the stakes are especially high in the furniture industry, where retailers deal with much larger and more valuable SKUs.
If they price furniture too low, their business loses money. If they price products too high, they risk overwhelming warehouses and showrooms with cumbersome inventory that simply won't sell. Both sides of the coin can spell disaster, but fortunately, price optimization can help retailers strike the perfect balance between profitability and demand.
In this educational guide, we'll cover the ins and outs of price optimization and how leading solutions like SaySo can help your brand capitalize on this potent strategy.
Price optimization is the process of analyzing customer and market data to determine the optimal price points for your products.
To be effective, price optimization requires access to strong data, and the practice of assembling these sources is called price intelligence. By using price intelligence to feed your optimization efforts, you can set prices that effortlessly entice shoppers while safeguarding profit margins.
You're likely asking yourself, "How can I go about collecting this data?" It's true that most retailers encounter some friction with this step, as price intelligence requires a significant amount of internal resources and a bit of external guidance. These barriers to entry often lead them to rely on educated guesswork when forming their pricing strategies — resulting in reduced margins and an overreliance on discounts to move certain products.
Fortunately, price optimization solutions like SaySo can do the heavier lifting for you. With real-time insights into customer willingness-to-pay data, you can form a robust price strategy that reclaims thousands in lost revenue. But we'll unpack that topic more below.
From increased sell-through rates to improved market responsiveness, these are the most notable benefits of an optimized pricing strategy.
The bread and butter of an optimized pricing strategy is the wealth of customer data it offers. With insights into precisely how much consumers are willing to pay for every SKU, you can effortlessly thread the needle between your margin expectations and your customers' price sensitivities. Gone are the days spent worrying whether your estimates were wildly off base.
How does an optimized pricing strategy determine consumer price sensitivities? Let's look at one of the largest furniture retailers across the globe, Ashley Canada, as an example. Ashley Canada uses SaySo to sell clearance products on its co-branded website, Ashley x Descend. By using a Dutch auction format and monitoring each bid and sale, Ashley Canada effortlessly collects willingness-to-pay data that even guides the pricing strategies of its standard products.
An optimized pricing strategy doesn't stop at consumer price sensitivities; it also accounts for shifts in demand patterns. Price intelligence delivers complete visibility into which products are currently flying off the showroom floor, and which ones would benefit from a modest discount.
With this knowledge, you can dynamically adjust your prices and inventory strategy to increase conversion rates, extract the most value from your current stock, and gradually reduce the need for clearance sales.
Pricing in step with market forces and consumer sensitivities can profoundly affect sell-through rates, even when it comes to your most pesky products like clearance inventory.
As most furniture retailers know, clearance is notoriously tricky to price because consumers expect it to be more steeply discounted than margins tend to permit. As a result, this stock accumulates much faster than retailers can offload it, stealing showroom space from full-priced products while leaking capital by the day.
An optimized pricing strategy can solve this problem. For example, by referencing historical purchasing trends for clearance products in each category, you can zero in on a price that will entice customers while protecting margins. In fact, when deployed over an extended period, an optimized pricing strategy can significantly reduce the amount of products that make it to the clearance section.
While the benefits of an optimized pricing strategy are clear, many retailers find themselves wondering where to begin. That's where solutions like SaySo come into play.
SaySo works with leading furniture retailers to deliver co-branded, digital shopping experiences that help profitably offload clearance inventory. By leveraging SaySo's Dutch auction pricing model, retailers can sell their dead stock at good margins while simultaneously gathering valuable pricing data. Every customer price action, from bid to final sale, is collected by our engine and funneled into easy-to-understand reports that you can holistically apply to future pricing strategies.
But the benefits don't end with price optimization and co-branded shopping. By enabling retailers to move their clearance operations to virtual storefronts, SaySo even helps offset the overhead costs of displaying clearance inventory in showrooms.
Intrigued? Here's what our 4-step auction and pricing optimization process looks like:
Before starting your price optimization journey with SaySo, we'll need a bit of information from you. This includes:
Combining this information with historical pricing data helps our team identify your target margins and establish strategic starting prices for auctions.
We usually work with retailers to set margins at the category level — but we're also happy to set them on a product-by-product basis. You might, for instance, want to offload inventory as quickly as possible and be happy to set the same target margins for all your sofas. Or you might want to account for the uniqueness of each SKU, from every sectional to every loveseat, and set margins that reflect that diversity.
In any case, after we've finalized your margins, we'll upload them into our system and use them to set the reserve price for every auction. This reserve price guarantees that no one can bid below a certain threshold.
While we take a highly strategic approach to setting your asking prices and margins, testing is the only way to gauge their viability. And, with each successive bid, we get a firmer sense of whether your pricing parameters are practicable.
The length of each testing period will depend on your goals. In scenarios where you need to move a lot of inventory ASAP, the testing period will be shorter. But, in more margin-sensitive scenarios where you want to get as precise as possible, we may need to run the test a little longer to get the most accurate sense of your consumers' uppermost sensitivity thresholds.
Once the testing period concludes, our team will provide in-depth feedback to iterate on. We might, for example, notice that a gently scratched dining table is only getting low bids and suggest that you lower your target margins for that SKU. Or, we might uncover that all kitchen appliances are in high demand and suggest that you increase your reserve prices for that category across the board.
After applying our feedback, you can officially kick off your auction and expect inventory to start moving quickly.
These comprehensive price learnings do much more than help offload inventory faster in clearance auctions. We use them to effortlessly facilitate more data-driven strategies that keep inventory moving and minimize the need for clearance sales.
For example, SaySo also provides top-level merchandising and marketing insights. Our engine might discover that a severely damaged product is more profitably written off than repaired. In another instance, it may determine that a product will sell better online than in-store and to market it accordingly.
No insight, no matter how granular, is below our notice. But don't just take our word for it. Look no further than our earlier guest, Ashley Canada. Before partnering with SaySo, they had limited visibility into what customers would pay for clearance inventory.
However, after launching the Ashley x Descend clearance storefront with SaySo, its team gained access to a bevy of insights, most notably that its customers would pay a premium for bedroom furniture. Acting on this insight by aggressively pricing their clearance bedroom line helped boost profit margins overnight.
Even better, users of the co-branded storefront have a track record of heading over to the main Ashley Canada website and purchasing complementary products at full price. Ashley Canada has since seen a 6x ROAS boost across both storefronts.
See what SaySo can do for your clearance inventory by booking a demo today!
Founder
February 10, 2025
How The Dufresne Group Drove a 47% Clearance Retention Rate With SaySo
Why Clearance Handling Costs Hamper ROI (and How Furniture Retailers Can Cut Them)
How Retailers Can Profitably Free Up Showroom Space for High-Velocity Inventory
Transform Your Excess Inventory Into Working Capital: 3 Simple Steps for Retailers
3 Ways Furniture Retailers Can Prevent Revenue Loss on Clearance Products
How Furniture Retailers Can Optimize Their Pricing Strategy with SaySo
How Furniture Retailers Can Solve the Clearance Problem in 4 Tactical Steps
Dutch Auction Pricing 101: Why It’s a Gamechanger for Selling Clearance Inventory
Clearance Marketing: The Secret LTV Driver Every Retailer Should Be Using
Recapture the Value of Your Overstock Furniture with SaySo’s End-to-End Clearance Solution
