In our last three articles, we’ve looked at the basic elements of incorporating reptiles into your pet store. In our final installment of this “back to basics” series, it’s time that we examined what we consider the nuts and bolts of including reptiles in your sales: pricing.
Properly pricing reptiles in your store means a significant reevaluation of your revenue streams. A traditional thought is that reptiles should be priced to provide direct net revenue to their sellers. With this in mind, a seller may not sell many reptiles, but the reptiles that are sold will make significant profit for their seller.
We, however, believe that there is a better way.
Selling more animals at significantly lower price points brings in a higher amount of net profit, based on the subsidiary and background sales brought in by the higher volume of reptiles overall. Our research demonstrates that a good profit margin to work on would be to set at a maximum gross profit margin of 40 percent. This allows for large discounts in comparison to your higher-priced competitors while still allowing plenty of room for aggressive promotions and sales within your store.
Why would we encourage this? Simply put, the best source of net revenue for a pet store owner is not the sale of an animal itself. There is more money to be made through residual sales: the components necessary for the care of that reptile, including caging, lighting, heating elements, substrate and food. With these elements only rarely available in mass market venues, a canny store owner can leverage a reptile owner’s basic needs for continual, evergreen profit.
Based on our observations of stores throughout the nation, we’ve assembled a baseline scenario that demonstrates the profitability of our pricing methodology.
Let us consider Pet Store A and Pet Store B. Both stores start to sell bearded dragons, purchased at wholesale for $35 each. However, these stores begin selling with one very distinct difference: Store A prices bearded dragons at $77, while Store B prices them at $55. Based on our observations, we can assume that Store A will sell approximately 50 bearded dragons in a year, grossing $3,850, while Store B will sell approximately 84 bearded dragons, grossing $4,619. By pricing reptiles at a lower price point, Store B ensures that it moves more animals, which more than makes up for the discrepancy in pricing.
However, the fiscal benefits of capping your pricing extend much further than the animals themselves. Consider that each bearded dragon also requires a cage, substrate, an under-tank heating element, an overhead heat lamp and regular food, most of which cannot be purchased at local big-box stores. If Store A sells only 50 animals, their gross revenue from these items will come to a total of just over $31,000 yearly. However, Store B’s increased number of reptiles sold equates to an increase in subsidiary items sold; Store B’s 84 bearded dragons means a gross revenue of nearly $51,000, approximately a $20,000 increase in gross revenue for Store B over Store A.
The differential in profits does not end there. Consider that 77 percent of reptile owners own at least one other pet, which also requires supplies, food and other materials that may not be available at local big-box stores. Each time one of your reptile customers picks up kitty litter at your store, each time your selection of leashes and collars catches a customer’s eye as they wait on a bag of crickets or mealworms, you’ve made a sale that would have normally gone elsewhere. These incidental sales can make up for a sizeable portion of your net profit margin, potentially increasing the differential between our sample stores from $20,000 to a whopping $70,000.
Savvy retailers not only know this information, but they maximize it to significant advantage. Coupled with well-timed, targeted sales, reptiles can form a solid foundation upon which your store can be built. Once you’ve established a baseline price for reptiles, stick to that price. However, don’t be afraid to offer specials, incentives or other deals to would-be reptile owners. As we mentioned in our inventory article, if a given animal hasn’t moved from your stock, consider lowering its price. In some circumstances, offer the animal for free with the purchase of an appropriate cage or tank. Again, the most important point to remember is that the animal itself is not the focus on your profits. The reptile in question is the key that opens the vault of follow-up sales of numerous, reptiles-specific equipment and supplies.
Starting new endeavors can be challenging in any business. Within the pet trade, it is easy to rest on one’s laurels. Time and again, though, we have seen stores that cater to their customers’ needs and wants succeed. Stores that don’t go that extra mile to meet customers’ needs fail. As you put forth your first reptiles for sale, keep our four keystones in mind: selection, inventory, presentation and pricing. Choose your reptiles carefully; keep them well-stocked in attractive, clean displays; and price them reasonably. Do this and you’ll earn customers for years to come.