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Step by Step Guide: How to Price Your Products Online | Fuel POD

Michelle
August 19, 2021

Step by Step Guide: How to Price Your Products Online

Starting to price your print-on-demand products might seem terrifying. Especially if this is the first time you’ve created an ecommerce business and you are looking for a magic formula that will boost your sales. 

It’s great that you are asking this question because guessing how to price a product and hoping that it works out is not a good strategy. But, unfortunately, there is no magic formula to determine an exact selling price. Consider how much profit you want to earn and how the market works on the custom products

Don’t worry. We’ll walk you through the process of choosing what’s best for you and your business in this post.

Young woman learning how to price products online
Find out here how to price print-on-demand products

1. Evaluate your costs 

First, you must establish how much it costs to create your product to sell online. Remember that what you are looking for with your Shopify print-on-demand products, it’s to turn them into profits, so you must ensure that your fixed costs will be covered while considering variable costs, even if you are paying for each item. 

There are some expenses you must consider when making the calculation:

Designing costs 

Surely you are thinking about uploading artwork for all your customized products, which means having design costs. You have two options here:

  • If you plan on hiring a graphic designer to create your artwork, you must calculate their salary with the number of sales you expect to sell with that design. This way, you will have an idea of how much profit you can get from it.
  • If you have skills as a designer and plan to design all your artworks, remember that you must value the time you spend creating a design with a realistic hourly rate. Add this to your product cost and evaluate the expenses.

Warehouse and shipping costs:

Fortunately, when using Shopify print-on-demand apps like Fuel, you don’t need to worry about having this type of expense. We take care of everything. You only need to enjoy the rewards! 

Marketing expenses: 

Remember that having a solid marketing strategy requires time and money if you want your online store to become relevant in social media or search engines. It’s recommendable that you consider adding a monthly fee for your store's marketing efforts to your product costs. 

2. Make a market research

Graphic icons explaining what is involved in a market research process
Market Research Process

First, dive into the habits of your target group. For example, how much do they generally spend on products similar to yours? Next, try asking your closest friends (that belong to the same target group) how much they would spend on your products. That will give you a good starting point to know if you need to lower or raise your prices. 

Second, find out what your competitors are doing. Investigate the market by visiting websites that offer the same products. Knowing how much your rival is selling their products, you can determine if you must decrease or go for a higher price

3. Choose a product pricing strategy

As we said before, there’s not only one magic formula to determine the base price of your products. There are many different product pricing strategies, but here you can pick the pricing model that works best for your ecommerce store: 

  • Three Price Points

You must start by establishing three price points:

  1. Lowest price: This price must assure you can offer some discounts without cutting your margin profits. 
  2. Logical price: Choose the price that makes sense for your business and target group.
  3. Best price: Choose a value that may seem a bit more expensive than you’ll offer but not derailed for your customers. 

With this strategy, you can set three pricing values according to the temporality and plans you have for your business. 

  • Cost-plus pricing:

One of the most common and effortless strategies is cost-plus pricing. You have to add the product costs with your desired profit margin to increase your retail price. If you plan on using this strategy, remember to choose your profit margin considering your expenses and how you want to present your brand to your customers. 

  • Dynamic pricing:

This strategy is also popular. It’s a pricing strategy in which your business must set flexible prices based on current market demands. 

If you plan to continually look for market trends, customer desires, and seasonal products, this is the strategy for you. Here, the price will change periodically according to the time of the year and the best-selling products of the market.

Person calculating and choosing a product pricing strategy on a laptop
Seller choosing a product pricing strategy

4. Test your strategy

There's no need to stress if the product pricing strategy you choose doesn’t succeed at first. You can try it again with a new one. Make the adjustments you need until you are thoroughly satisfied with the results. 

Make a regular review of your prices, check your seasonal products, stay in the loop of the market trends, check your competitors’ moves, and don’t forget to always focus on your target group. 

Now that you know how to price your products for retail, remember: 

  • Don’t upload your products to your store until you have your cost strategy carefully finished.
  • Choose a strategy that matches your business vision and products. If you feel lost, you can always have some support from us!
  • Have a clear vision of how you see your business in some months. This way, you will make it easier to achieve your goals!

Are you ready to take your small business to the next level? With Fuel as your partner, you’ll reach all your goals 😎

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