In the world of merch, especially if you’re using a Print-On-Demand (POD) structure, pricing can be tricky. With base prices for blank products, printing, and shipment often being on the higher side, striking a balance between fair pricing for your customers and making a profit can feel like walking a tightrope. But fear not! We’re here to guide you through pricing your products effectively to facilitate making a sale.
How to Set Prices
To set a price, you need to start with some basic math. The first step is calculating the total cost of producing each product. This includes everything from the cost of materials to the expenses involved in printing and shipping.
One golden rule: never set your pricing at or below the cost of production. If you find that a specific product is more expensive to make than what you’d like to charge, consider switching to a less costly alternative.
Remember, base prices can vary widely depending on the product and its quality. Offering cheaper products often means downgrading quality, while higher-quality items will inevitably come with a higher price tag.
How to Price a Product
Here are three distinct price strategies you can follow:
1. Determine your desired profit margin
Start by deciding the percentage of profit you want to add to each product’s cost.
This involves calculating the total costs involved in producing, marketing, and distributing the product and then adding a desired profit margin. A good benchmark is to set a specific profit margin, ideally in the form of a percentage. For example, you might aim for a 20% profit margin, meaning 20% of the selling price will contribute to your profit after covering costs.
2. Analyze your competition
Take a close look at how your competitors are pricing their products.
This approach considers what customers are willing to pay based on their perceptions of value and how your prices stack up against your competitors. Set a price that is competitive within the market, which doesn’t necessarily mean matching your competitors’ prices, but rather ensuring it falls within a range that customers find reasonable and justifiable.
Factor in your brand positioning and decide whether you are offering a premium, mid-range, or budget-friendly product. For instance, you can take their ballpark figures and adjust slightly to be more affordable if needed.
3. Consider brand positioning
Prices are typically set based on the perceived value your product provides to the customer. In the context of a clothing brand, this means determining how much customers are willing to pay for the competitive advantage and overall value your brand offers. Look at clothing brands or well-known merch collections to see their pricing strategies. If you’re new to the business, it’s wise to stay below those figures until you build up your popularity and quality.
Steps to Setting the Right Price for your Product
Step 1: Calculate your costs
Add up all your production costs, including materials, printing, and shipping. This gives you the base cost.
Step 2: Set your profit margin
Decide on the profit margin you want. For example, if your base cost is $10 and you want a 20% profit margin, you would add $2, making the selling price $12.
Step 3: Research the market
Look at competitors’ prices for similar products. If most competitors are selling a similar product for $15, your price of $12 is competitive.
Step 4: Consider your brand value
Evaluate what makes your product unique and what additional value it provides. If your product has unique features or a strong brand reputation, you can justify a higher price.
Step 5: Adjust based on customer feedback
Once your product is on the market, pay attention to customer feedback regarding pricing. If customers feel the price is too high or low, adjust accordingly.
Conclusion
Setting the right price for your merch is an art. It requires understanding your costs, determining a fair profit margin, analyzing the competition, and considering the perceived value of your product. By following these steps, you can ensure that your prices are fair, competitive, and profitable.
Remember, pricing is not a set-it-and-forget-it task. Keep revisiting and adjusting your prices based on market trends, costs, and customer feedback to stay ahead in the game.
