How do I compete with the big online retailers on price?

On highly comparable products you will rarely win on raw price, and chasing them until you lose margin is a dead end. The strategy that holds is different: keep loss leaders at a competitive price to bring customers in, then build profitability on the rarely compared items and on the value a website does not offer, meaning advice, immediate availability and trust. Compete on what you do well, not on what someone else's automated warehouse does better.

What is a healthy margin for a pet shop?

There is no single number that fits everyone, because it depends on the product mix, the fixed costs of your area and the services you offer. The point is not to hit a reference percentage on every item, but to have an overall margin, across everything sold, that covers all fixed costs and leaves a profit. Reason about the shop's average margin as the target, and accept that individual categories contribute differently.

Should I put the same margin on food and accessories?

No, and it would be a mistake. Branded food is highly comparable and bears thin margins, while accessories, toys and hygiene are rarely compared and sustain higher margins. Applying the same margin to everything makes you uncompetitive where the customer checks prices and leaves money on the table where they do not. Set the margin by the role of the category, not uniformly.

How often should I update prices?

On a regular rhythm, not only when the books stop balancing. A periodic review of purchase costs and category margins, with timely updates whenever a supplier changes terms, keeps you aligned without shocks. Changing everything at once after months of waiting scares customers; small frequent adjustments pass almost unnoticed and protect the margin day by day.

Running a pet shop40 minLevel: IntermediateUpdated on August 20, 2026

Setting prices and margins for products in your pet shop

Stop copying competitor prices: build a price list from the margin up, tell loss leaders from high margin lines and protect the profit you actually keep.

Audience: Pet shops
Species: All species
Scope: Valid everywhere, Italy, European Union

What you need before you start

L'elenco dei prodotti con il costo di acquisto reale, sconti dei fornitori inclusi
Una stima dei costi fissi mensili del negozio, dall'affitto alle utenze
I dati di vendita degli ultimi mesi, anche solo esportati dal registratore di cassa
Un foglio di calcolo o un gestionale dove impostare i margini per categoria

The most common way to set prices in a pet shop is also the most dangerous: look at what the shop next door charges and sit a little under it. It works until you notice you are working hard and earning little, because you copied the prices of someone whose costs are different from yours. The right price does not come from the competition, it comes from your numbers: the real cost of the product, the fixed costs it has to cover and the margin you need to stay open. This guide takes you from the copied price to the built price. It does not promise you will be the cheapest on the street, it gives you a way to know, for each category, what you are really earning and where you are losing money without noticing. Tax rates and accounting duties vary: check those with your accountant, here we deal with the margin.

Markup and margin are not the same thing

The mistake that muddles the most accounts in a shop is confusing the markup applied to cost with the margin on the selling price. They are two ways of looking at the same profit and they give different numbers. Anyone reasoning only in markup convinces themselves they earn more than they do, because the real margin, what is left against what comes in, is always lower than the markup.

How the same profit looks different depending on whether you read it as markup on cost or margin on price. Prices are net of tax, handled separately.
Product cost	Selling price	Markup on cost	Margin on price
10	15	50%	33%
10	20	100%	50%
10	25	150%	60%
10	13	30%	23%

Working out the real cost, not the invoice cost

The price you pay the supplier is not the real cost of the product on the shelf. Between the two sits a set of items almost nobody adds up, and those items are exactly what eats the margin of anyone pricing on the purchase price alone.

Start from the net purchase cost
Take the supplier price already net of quantity discounts and reserved terms. It is the base, not the finish line.
Add the costs around the purchase
Transport, any duties, packaging and the time cost of receiving and shelving the goods. On some categories these weigh little, on others they change the whole picture.
Account for waste and unsold stock
Food expires, some items sit still, others get damaged. A loss percentage spread across the category makes the cost real rather than optimistic.
Allocate a share of fixed costs
Rent and utilities are not tied to a single product, but the price list has to cover them. Spread them as a share of expected sales, so every price carries its part.
Reach the full cost per category
Add these items and you have the cost to build the margin on. From here on every price is a conscious choice, not an imitation.

Not every product should earn the same

A smart price list does not apply the same margin to everything. Each category has a different role in bringing customers in and making the books balance, and the price should be chosen by that role. The key is to offset low margin lines with high margin ones, without asking any single line to carry it all.

Loss leaders: highly comparable items, often the big branded kibble bags, where the customer knows the price. Here the margin is thin and its job is to bring people in.
High margin lines: accessories, toys, hygiene, items rarely compared between shops. Here the margin sustains overall profitability.
Advice products: those where your recommendation makes the difference, where the customer pays for expertise and not just the object.
Seasonal products: demand concentrated in time, a price that can carry a higher margin at the peak and must be managed before stock is left over.
Special and pre orders: a service that justifies a full margin, because you offer something the customer cannot find ready elsewhere.

Running discounts without burning the margin

A promotion set by instinct is a hole in the margin dressed up as a commercial move. Every discount should be decided knowing what it costs and what it must achieve in return, otherwise you train customers to wait for the cut and sell less and less at full price.

Before discounting, work out the new margin: a discount on an already thin margin line can wipe out the profit or push it negative.
Give the promotion a clear goal, such as clearing stock near expiry or attracting new customers, and measure whether it hits it.
Prefer promotions that grow the basket, like a discounted second unit, over a flat cut on a single item.
Use the loyalty programme to reward returning customers, instead of blanket cuts you also give to those who would have paid full price.
Set a duration and stick to it: a permanent promotion becomes the new list price, not a discount.

Reviewing the price list on a rhythm, not at random

A price list is not carved in stone: supplier costs change, demand shifts, some categories stop earning. A shop that reviews prices on a regular rhythm reacts before it loses; one that touches them only when in trouble is always chasing.

Review purchase costs at fixed intervals and update prices when a supplier changes terms, without waiting months.
Look at margin by category, not just turnover: a category that sells a lot but earns little can hide a loss.
Spot products sitting still too long and decide whether to relaunch, discount or drop them from the shelf.
Check that high margin lines are visible and offered, not hidden at the back where nobody sees them.
Compare the shop's overall margin with the fixed costs: that is the number that tells you whether the list is working for you.

Frequently asked questions

How do I compete with the big online retailers on price?: On highly comparable products you will rarely win on raw price, and chasing them until you lose margin is a dead end. The strategy that holds is different: keep loss leaders at a competitive price to bring customers in, then build profitability on the rarely compared items and on the value a website does not offer, meaning advice, immediate availability and trust. Compete on what you do well, not on what someone else's automated warehouse does better.
What is a healthy margin for a pet shop?: There is no single number that fits everyone, because it depends on the product mix, the fixed costs of your area and the services you offer. The point is not to hit a reference percentage on every item, but to have an overall margin, across everything sold, that covers all fixed costs and leaves a profit. Reason about the shop's average margin as the target, and accept that individual categories contribute differently.
Should I put the same margin on food and accessories?: No, and it would be a mistake. Branded food is highly comparable and bears thin margins, while accessories, toys and hygiene are rarely compared and sustain higher margins. Applying the same margin to everything makes you uncompetitive where the customer checks prices and leaves money on the table where they do not. Set the margin by the role of the category, not uniformly.
How often should I update prices?: On a regular rhythm, not only when the books stop balancing. A periodic review of purchase costs and category margins, with timely updates whenever a supplier changes terms, keeps you aligned without shocks. Changing everything at once after months of waiting scares customers; small frequent adjustments pass almost unnoticed and protect the margin day by day.

What to do next

Stop copying the shop next door and build prices from your own numbers: reason in margin on the selling price, work out the full cost per category including freight, waste and a share of fixed costs, then set different margins by the role of each category. Keep loss leaders competitive, defend the margin with value, manage discounts by calculating the remaining margin, and review the price list on a regular rhythm driven by sales data.