Cost Break Strategies

What is this?

A cost break model prices items by what they cost: cheap items carry a high margin, expensive items a lower one, in bands you define - the classic sliding scale of independent retail. Building the model is Cost Break Analysis; this page is about using a model inside a pricing strategy, where it becomes a step like any other.

How a cost break prices an item

The model is a table of cost ranges (From / To), each with either a Target Margin or a Fixed Price. When a step uses the model, every selected item's cost is looked up in the table and its future price is set to reach that band's margin (or the fixed price). Rounding is applied afterwards like any other step.

Building the model - Manage Cost Breaks (Ctrl+B)

Strategy > Manage Cost Breaks opens Manage Cost Breaks. Choose a Cost Break Model or create one from the hamburger menu (Import Cost Break Models, Rename Current Cost Break Model, Export ... to Excel).

Model Options decide the bands: Model Manual with your own number of Break Points (2-15), or Simple-10 / Simple-13 for ready-made ten- and thirteen-band scales. Rebuild recalculates the bands; Auto Rebuild on Model/Break Count Change? does it as you change them, and Update Sku Data after From/To Range Change? refreshes the counts as you edit ranges.

The grid shows each level's From, To, Zero Sale Skus, Active Skus and Calculated Margin (the margin the band currently sits at), then the decision: Fixed Price with Fixed $, or Target Margin. Right-click a row to insert a level before or after it, or delete it. Save keeps the model; Reset discards edits; Delete removes the model.

The Calculated Margin and SKU counts are what make the model a strategy tool rather than a spreadsheet: you see, per band, how many items sit there and what margin they earn today before you decide the target.

Using the model in a step

1. On the main window, select the SKUs the model should price (a department, a vendor, everything).
2. On the Future Price panel choose Set Future Price to: Cost Break: ???; a Select Cost Break list appears - pick the model. The entry then reads Cost Break: name. The pencil beside it opens Manage Cost Breaks on that model.
3. Set the rounding scheme and any Plus or Minus as usual, Apply to preview, then save the step with the camera - see Creating a Strategy Step.

A typical strategy uses one cost-break step as the broad first step (everything priced by cost band) and specific steps below it for sensitive lines, vendor levels and exceptions - see the hierarchy.

Tips

Start from Simple-10, run the strategy, read the Summary, then move to Manual only where a band needs a different edge.

Keep target margins descending as cost rises. A band with a higher margin than the one below it produces price jumps customers notice.

Common Questions

Q: An item was not priced by the cost-break step. A: Its cost falls outside every band (often $0.00 cost). Add a band that starts at $0.00, or price zero-cost items with a separate step.

Q: Can two strategies share a model? A: Yes. Models are stored in the database and any step in any strategy can select them.

Q: Fixed Price or Target Margin? A: Fixed Price for a band where you want one price point regardless of cost (impulse items at $0.99); Target Margin everywhere else.