# IDEX Online Research: Sales By Price Point: Where’s The Business Really Done?

April 15, 10While a good management information system can provide detailed data about a jeweler’s sales by retail selling price, the segmentation of this data is arguably arbitrary.

For example, at the lower price points, jewelry sales are segmented by $100 increments:* *$0-100, $100-200, $200-300 and so on.* *As retail prices rise to $600, the price segments jump to $200: $600-800, $800-1,000 and so on.* *Above $1,000, the segments rise to a range of $500, with even wider ranges above $5,000.

The reason that jewelers’ sales are segmented in those arbitrary groupings relates to the ability to see a small snapshot by detailed retail price point.

**Natural Retail Price Breaks**

In an effort to see where a jeweler’s sales actually fall by retail price point, total sales can be segmented by quartile.* *In other words, jewelers can see “natural” sales segmentation by an array of price points.* *

The Balance To Buy (BTB) system uses sales quartiles – which segments a jeweler’s sales into quarters – to see where the business is concentrated.* *According to BTB, the “natural” quartiles shown on the graph below – which were derived from the company’s sample – appear to be nearly universal for specialty jewelers with characteristics similar to the sample:* *$2 million annual sales and an average ticket in the $700-800 range.* *

By quartile (roughly 25* percent* of sales), the graph below illustrates the “natural quartile” segmentation of sales for this sample of jewelers.

Source: Balance To Buy |

While a jeweler’s natural sales segmentation by quartile falls in the ranges shown on the graph above, unit sales by those same quartile segments are quite different.* *For example, as the graph below illustrates, the top quartile of sales – roughly $7,500 and higher – are generated by only 1* percent* of unit sales.* *Conversely, at the fourth quartile level, 84* percent* of unit sales occur below $1,000 retail.* *This diversity in unit sales versus dollar sales illustrates why inventory levels are so important:* *if the proper inventory level isn’t in the store, the sales won’t be made.

Source: Balance To Buy |

**GMROI Is Higher At Lower Price Points**

When Gross Margin Return on Investment – for a jeweler, this “Investment” is “inventory” – is calculated, jewelers will find that they make a much better financial return on their lower-priced goods that turn at a fast rate.* *At the end of the year, they will put more profit dollars in their pockets from lower-price merchandise than from higher-priced goods.

The graph below illustrates the gross profit return based on each dollar invested in inventory, based on a sales segmentation by “natural quartiles.”* *

Source: Balance To Buy |