I just want to offer a bit of general feedback to all those Mom and Pop stores that find themselves trying to compete with large, volume-buyer, retailers. It's acceptable in many circumstance to charge a little extra for the things you sell. Everyone probably understands that you can't discount your prices as much as a Wal-Mart type store that buys the same item in multiples of a billion. However, if the only way you think you can stock a common (i.e. non-specialty) item is to charge way over list price for it, you'd be better off just not stocking it at all. When your customer finds out they've been dramatically overcharged, it will likely be the very last thing you sell to that customer.
I recently visited "The Country Pedaler" in Castle Rock, CO on the way to a mountain bike ride to pick up an innertube, just in case I had a flat on the ride that couldn't be patched. It's a small shop, so I went in expecting to pay up to the full retail list price for the tube. The store location was convenient because it was along the way to the trailhead, so I didn't even mind paying a bit more than I would have paid for that item at a larger bike store like BikeSource or Performance Bicycle. I had never bought a tube of the particular size I needed so I wasn't sure what its normal price should be. I was charged $10.00, which I thought was a little high, but I trusted that even if the price was on the high end of the retail price range for that item, it wouldn't be too different than what I might find elsewhere. So, I considered the convenience factor to be worth maybe 10% or 20% and bought it anyway.
Any time I find that I have been charged more than 40% OVER the full retail list price for a basic, commodity, accessory item (like a bicycle innertube), I can't help but feel I've been ripped off. I found out later that the same exact item has a full retail list price of $7.00. To make things even worse, I found that the price for a similar (maybe even better) quality tube, at other local specialty bike stores, was as low as $5.29. "The Country Pedaler" price was marked up in excess of their competitors by a margin of almost 90%. You read it right, almost double the price other local stores charged for the same simple accessory item. It wasn't hard to find or in short supply. It didn't require special expertise or consultation from a sales person. It was just WAY overpriced.
The tube was the very first thing I purchased from The Country Pedaler bike store, and, because it was so drastically overpriced, it will likely be the VERY LAST thing I purchase from that store. They don't really have any option to correct their mistake now because they've already proven that I can't trust their prices to be even approximately fair, never mind competitive. Offering a refund or price adjustment now wouldn't even change my impression that the store generally charges an exorbitant amount over even full retail list prices. I wonder if it is any consolation to the store's owner that he gets to keep that extra $3.00 profit on that one sale (assuming I don't just return it for a refund) or if he even realizes how much it cost his business to jack up the price on a simple accessory item.
It is possible that I might decide to give The Country Pedaler a second chance several years from now, just to see if they got a clue and changed how they're setting their prices, but for now, they've lost me as a customer. Somehow I doubt the store will survive if they continue to alienate potential customers they way they have with me. I suspect anyone who finds this blog post will be reluctant to do business with them either. I certainly won't be recommending that anyone else visit that shop. In fact, I'll definitely warn them and send them elsewhere whenever possible.
Other mom and pop retailers that wish to keep customers and remain competitive should take this as a warning. You might be able to justify prices closer to full retail because you may be in a more convenient location than the "discounter" shop. Your customers might not even mind spending a little extra with you if you're able to give them more personal attention when they visit your store. But beware if you go beyond "a little extra" on your prices and gouge someone by pricing a relatively insignificant item well over its fair retail price. You're compromising the trust they have in your store, swapping positive word-of-mouth advertising for bad, and forfeiting any profit you might have earned on future purchases. All you gain for that is a few extra bucks, one time... most likely one LAST time.