"The first thing you have to understand is the selling price is a function of your ability to sell and nothing else. What's the difference between an $8,000 Rolex and a $40 Seiko watch?...The difference is your ability to sell." – *Lawrence L. Steinmetz, co-author of How to Sell a Margins Higher Than Your Competitors*
When it comes to pricing your products and designs, there’s no magic formula that will lead to optimal sales. However, there are a number of practices that you can keep in mind as you’re determining the proper retail value of your offerings. ###1)Cover Your Costs You’re not going to launch a business in order to lose money, right? Therefore, when pricing your products, you’ll want to assure that the price covers any corresponding costs. These costs would include: -Time -Marketing expenses -Product’s wholesale costs -Shipping costs Then, once you’ve figured out how to break even, you can add your commission on top of the existing price tag. Another helpful tip: it’s important to remember that ‘free shipping’ is always more enticing to the customer. On the flip side, you shouldn’t be responsible for paying these costs out of your own pocket. Therefore, you can cleverly adjust your product price to assure that you’re still making money despite the ‘free shipping’ offer. ###2)Do Your Research It’s in your best interest to dive into the spending habits of your target group. Understand how much disposable income they’re generally operating with, and determine the maximum price they’re willing to spend on your products. While you won’t get an entirely-accurate answer, you could try running your products by your family and friends. Ask them how much they’d pay for your products, and then ask them how high they’d go with their spending. It’d be a clever idea to use this test on those with different incomes, ages, and interests, allowing you to get a more well-rounded answer. Of course, you could also refer to competitors. Regardless of whether these businesses have done their own research, you can guarantee that customers will be shopping around for the best possible deal. By having some kind of idea of how much a rival’s products are selling for, you can better determine your own product prices. ###3)Embrace the Number ‘9’ We’re not suggesting that you manipulate your customers, but you can capitalize on their perception of price tags. Prices that end in 9 or XX.99 are generally perceived to be lower than their round-number counterparts. We’ve added our price tool in our t-shirt designer to make this easier for you to visualize. ###4)Determine Three Price Points When determining your product price, you should establish three pricing points: -Lowest-possible price: this will assure that you can offer discounts without cutting into your margin -Logical price: the value that makes the most sense for both you and your customers -Best-possible price: a value that may seem a bit overpriced, but not overly jarring to customers - By having these three pricing points, you’ll have three values that you can choose from: a sale/discount price, a standard price, and a limited/brand-new product price. ###5)Test It Out If at first you don’t succeed, try and try again. If you find that your pricing isn’t working, don’t get frustrated. Instead, revamp your strategies to determine what actually converts. There’s no real ceiling when it comes to making sales, so continue to make adjustments until you’re satisfied with the results.