How do you sell at margins above keystone? Can you mark products up based on their perceived value?

With everybody surfing the net these days, you can't go too far above keystone, unless you have the perfect customer: rich and blind. It's not like the suggested retail price is any big secret any more. We try to stay as close to keystone as we can, understanding that that's what the customer is looking for. We do gourmet foods, which we can't ask that much for, and we have some unusual artist- made products that we can. In the latter case, I look for quality and originality to sort out the humdrum from the exceptional. There's no formula; you have to go by your instincts, particularly about what your market will bear. It really is a case-by-case issue. You have to go for something original so that when you're on the cutting edge you can ask for a little bit more. And with good service, you can get it.

Simple, very simple. I look at the product, including its quality and craftsmanship. I also check its availability. Can customers get it somewhere else, or am I the only one that has it? You have to know who your target customer is. Money is not likely to be an issue. We may have something that's worth $30, and it means nothing to that customer. But if we raise it to $42.50, they snap it up. I deal in a lot of one-of-a-kind products. That's a very important part of my business, knowing the value and what the market will bear. Since I deal in goods from all over the world, I might never see a lot of my things again. A guy goes into the rain forest and brings me stuff that's not on the mass market anywhere, so I can charge a little more. By doing that, I'm able to keep other things in the store more reasonable.

For me to know if a product is good for my store and how much I can charge for it, I need to pick something up and see it with my own eyes. When I'm in China, I don't want to be taken advantage of. But I don't want to negotiate either. I have an idea already what other retailers are going to charge for that product. I have to consider if the price they are giving me is competitive. It's a big guess when you're an importer: you don't want to gouge anybody, but you want to get fair market value. After all, I'm the one who rode the stinking bus out to the village. Once I've bought, we set the price as a team effort here in the store. We take into account how hard it was to get the product in, how difficult it is to display, how much effort we put into it. I usually lowball it and my staff tells me, "No, no, it's worth way more than that."

I usually know what I'm personally willing to pay for something. In addition, I look in every catalog and magazine, and see what things are currently going for. I recently bought some plantation chairs from Nadeau's for $350 each. My normal markup is three times. With furniture, I'll often do a four time markup, which, in this case, would have been about $1,400. But I'd seen this chair in a magazine for $2,800, so I marked it up to $1,650 and they blew out of the store. If I go too high on something I can always come down, or give a good customer a break on the price. Of course, I can't do that with everything. I'm giving you an example of a high-quality piece of furniture. Then again, sometimes an item is a mistake or an impulse buy and I can't even do three times. It all depends on the quality.