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Best Practices: Increasing Your Average Unit Retail (AUR)

Running a small business requires focus and attention to detail. In addition to managing budgets and making sure payroll is processed, as a small business owner you are responsible for tracking a number of metrics or KPIs (Key Performance Indicators). In The Sales and Retail Metrics You Can’t Ignore we discuss some important KPIs to track.

One of the main KPIs is average unit price. It’s sometimes referred to as average unit retail or AUR. We’ll refer to it as AUR going forward. 


What is Average Unit Retail or AUR?

AUR is the average price of items sold during a specific period of time. It’s calculated by dividing total revenue by the number of units sold. 

AUR = Total Revenue / # of Units Sold

Let's start with an example

 Your store had sales of $20,000 in the month of February and sold 250 items. To calculate AUR, you’d take the $20,000 and divide by 250. Your AUR would be $80 for the month of February. 

Basically, AUR is a measure of how much a customer is willing to spend. Changes to AUR may indicate that the price is too high or too low on a specific item. If an item is priced too high, you’ll sell fewer. 

Businesses use AUR to compare pricing across departments or categories as well as comparing to industry metrics. Make sure you’re always looking at AUR alongside other sales and retail metrics. 

Why price point evaluation is important

You should routinely evaluate your company’s pricing. Do you offer a diversity of price points? Are there enough higher priced items to drive sales? Are too many items below $20? Do you have the right spread of pricing options? 

It is important to have the right selection of price points to ensure you don’t miss sales opportunities. Look at pricing by category to make sure you cover all price points. If you discontinue products, make sure you bring in similarly priced products to fill the holes.


How Can Small Businesses Increase Average Unit Retail?

After ensuring your products are at appropriate price points, you should craft a plan for maximizing AUR potential. This includes training employees on new sales techniques, remerchandising the store to highlight higher ticket items, and more! 

We’ve recommended six tactics below to get you started…

Ask the customer the right questions

This is not about deceiving the customer. This is about listening and identifying a need based on customer feedback. Don’t just shove ideas at them. Ask what they’re looking for. Listen to what they say. Follow up. Then proceed to share product ideas. But don’t just recommend a single product; recommend an entire solution. Whether you sell bikes or bark mulch – accessories, tools, and service add-ons aren’t upsells, but good customer service. 

Train Your Employees to Focus on High Ticket Items First

After determining what the customer is looking for, start providing options. But suggest higher ticket items first. As the customer responds, they may tell you they’re looking for something a little bit less expensive. Then move to lower priced items. If you start the other way around, you’ll see more price resistance as your suggestions increase in price.

Prepare Cheat Sheets to Help the Sales Process

After determining what the customer is looking for, start providing options. But suggest higher ticket items first. As the customer responds, they may tell you they’re looking for something a little bit less expensive. Then move to lower priced items. If you start the other way around, you’ll see more price resistance as your suggestions increase in price.

Offer your customers a financing option

You’ll often see some price resistance to higher ticket items. Depending on your business model and industry, this could be a great time to offer customer financing. If you already have a program in place, make sure to include this as part of your sales messaging. If you don’t, consider setting up a financing option for your small business. Learn more here.

Place High Ticket Items at the Front of the Store

You want customers to walk in and instantly fall in love with a high ticket item. Make sure you are optimizing potential sales by highlighting your big ticket products. Place them front and center. They’re more likely to draw the customer into the store and may result in higher sales. 

If you want to get detailed, do a price analysis by shelf location in your store. Set a targeted retail value for the products placed on the front table. Set a dollar threshold for what can go in the window. Then place products accordingly.

Consider Packaged Deals / Product Bundles

One way to increase AUR and drive sales is through packaged deals and product bundling. Bundling is when two or more items are combined to sell as one product or bundle. This bundle offers customers a perceived savings and is often sold at a price lower than the sum of the bundled items. Sales treatment of a bundled product varies by business, but in some cases it boosts AUR because revenue increases while the number of units sold stays at one.

As you review your pricing strategy and analyze your price points, pay attention to your average unit retail (AUR). Use new sales techniques and focus on product placement to drive an increase in AUR. And keep monitoring AUR alongside other important KPIs to maximize business potential. 

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