Here's How Five Below Keeps Its Prices So Low

Due to the fact that Five Below is such a retail force to be reckoned with — they have 950 stores in 38 U.S. states and a robust online presence, per their website – they are able to get their vendors to offer them fabulous pricing, even on tech items. Before the Pennsylvania-based brand hit its heyday, sure, they took a loss on the sale of $5 bluetooth speakers. But now that the company generates $1.5 billion in revenue, they are in a better position to haggle with manufacturers, so that they actually do earn margin on each sale, according to The Motley Fool. And that margin is even better now that they're getting away with "above five" pricing.

Columbia Business School marketing professor Ran Kivetz said that these lower prices ultimately drive sales for Five Below because shoppers feel free of guilt to buy items they'd otherwise consider luxuries. "Guilt is not necessarily something that people are conscious of, but it still drives their behavior," Kivetz explained to The Washington Post. "So the ability to match in the same item a sense of luxury and necessity, it helps alleviate the guilt and helps make the purchase much easier."