Price it Right! A Retailer’s Guide to Setting Store Prices with Regression (Without Losing Your Mind)

Setting the right price is like nailing a good punchline — you need to get the timing and delivery just right. If you’re a retailer, you’ve probably faced the eternal struggle: pricing too high scares off customers, while pricing too low leaves you bankrupt before you can say “clearance sale.” Enter regression, the math hero who’ll help you set prices smartly and, trust me, no advanced degree required! So, let’s break it down, step by step, and have some fun while doing it.

Step 1: Data is Your Friend

Before jumping into regression, you’ll need some data. Imagine hosting a dinner party but with no clue about your guests’ preferences. Awkward! You need the basics: past sales data, competitor prices, customer demographics, and even economic conditions. These data points are your guests, and trust me, you want to know them before setting the table (or prices).

Anecdote: “I once tried to set prices without data. It was like shooting darts blindfolded… except the darts were my money, and the bullseye? Nowhere in sight.”

Step 2: Choose the Right Variables

Okay, now you’ve got your data buffet. Time to choose your variables. What actually influences the price of your products? Things like:

• Cost of Goods Sold (COGS): You can’t sell $10 jeans if they cost you $12 to make. (Unless you…