One of the biggest challenges for every retailer who is opening a dollar store is to continuously lower the cost of goods sold. One way to accomplish this important task is by using dollar cost averaging.In fact, dollar cost averaging can be a powerful management tool for those who are opening a dollar store.
Dollar cost averaging is simply the process of averaging the cost of goods sold across a specific interval. It might be a single order or the orders for a week, month or a year. In fact to be most effective, retailers who are opening a dollar store will likely use dollar cost averaging across many of the above intervals.
If you are opening a dollar store consider using dollar cost averaging for every order that you complete. If you have established cost of goods sold goals, you can then see what impact each order will have on achieving that goal. Next roll the orders together on a weekly basis and average across the week. Are you still on track to hit your goal? If so, the orders across the week were inline. If not, adjustments in upcoming orders should be made to pull your average back in line against the goal. Finally, weekly orders can be rolled together to insure that your average across the entire month was inline.
For most retailers who are opening a dollar store the cost of goods sold is the biggest single cost of doing business. It is important that tight controls be kept on the cost of goods sold. Efforts should be made to continually roll that number downward. In fact, just a 1¢ decrease in the cost of goods sold across an entire year can have a huge impact on the bottom line. Put dollar cost averaging to work for you.
