Whether you’re a Youtuber, an aspiring designer or you sell custom tees as a side hustle, how you price your merch is a strategy on its own.
One thing is certain, though, selling quality products is non-negotiable if this is your brand. But if you’re paying too much for inventory, you’re not left with a lot of options on how to price your merch. Check out R&P Prints Canada. They’re also all about the quality, clothing and prints, but they’re able to buy enough quantity to pass the savings on to their clients.
When you do have options on how to price your products, these are some of the strategies out there.
If you’re the new kid on the block in a crowded market, one way to try and carve out a share of it is to announce your arrival with discounted prices and promotions. This can be a risky strategy, especially if your margins are already thin.
Before employing this tactic, you have to forecast your budget and calculate how long you can continue to undercut your competitors before you go under. The only way it can work is f you think that you can grab and hold a big enough share of the market during that time. Keep in mind it will take a while before you can charge market prices as you will have to very gradually raise your prices so as not to alienate your customers. You also run the risk of branding yourself as a low-quality, bargain brand.
This is a more common strategy, especially with new entrepreneurs. Cost-plus pricing is simply calculating your total cost per unit and adding a markup for profit. A couple of notes on this method:
- Your numbers have to be accurate, and you either have to be super confident that your costs won’t increase or your profit margin will have to include a buffer.
- Cost-plus pricing doesn’t consider market value, so it’s possible that you’re leaving money on the table if the market price is higher, or you’re potentially losing sales if your prices are higher.
- On the other hand, having a set, predictable profit margin can help you plan better for the future.
Another pricing option is to simply charge what your competitors charge, or use their price(s) as a baseline and set your price either higher or lower based on how you differentiate your merch from the others on the market.
Price skimming is done by companies that introduce a brand-new product on the market and charge as much as they can for it. New companies will eventually come along and charge less for a similar product, but the original company is banking on having an established brand, a solid customer base and enough in profits that they can continue innovating. Apple is a fairly common example of a company that does this.
This is a similar approach to price skimming where a company will (after extensive market research) base their price on what their customers perceive the value of the product is.
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