Keystone pricing

Definition updated on November 2023

What does keystone pricing represent in retail pricing methodology?

Keystone pricing is a retail pricing strategy where the retail price of an item is set at double its wholesale or cost price. In simple terms, the retailer or reseller marks up the product price by 100%. For example, if a sneaker reseller acquires a pair of sneakers for $100, using the keystone pricing method, they would set the selling price at $200. This straightforward approach ensures a significant profit margin for each sale. However, it's essential to note that while keystone pricing offers a simple formula, it might not always be the most suitable strategy for every item or market situation. In the sneaker resell world, the market value of a sneaker can be influenced by various factors such as rarity, demand, brand collaborations, and cultural significance. As such, some sneakers might command a much higher price than the keystone pricing would suggest, while others might need to be priced lower to stay competitive. Regardless, keystone pricing provides a starting point or reference for resellers, especially when they are unsure about how to price a product. It gives a clear picture of potential profit margins, allowing resellers to adjust accordingly based on other market dynamics and their business objectives.

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