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Step by step guide: How to price your products online

Michelle
December 16, 2020

Starting pricing your print-on-demand products might seem terrifying. Especially if this is the first time you create an ecommerce business and you are looking for a magic formula that will lead your sales up.

It is magnificent that you are asking this question to yourself because guessing the price of a product and hoping it works out isn’t a good strategy. Unfortunately, there’s no magic formula to determine an exact selling price.

You must take into consideration some factors like how much profit you want to earn, and how the market is working in 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.

Evaluate your costs

First, you must establish how much it costs to create your product. Remember that what you are looking for with your Shopify print-on-demand products is to turn them into profits, so you must warrant that your expenditures are covered, 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, and that means having design costs. So, you have two options here:

  • If you are hiring a designer to create your artwork, then you must calculate the pay of your worker with the number of sales you expect to sell with that design. This way, you will have an idea of how many profits you can get from it.
  • If you have designer skills and you 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 print-on-demand companies 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 strong marketing strategy requires time and money if you want your online store to become relevant in social media or search engines. So it is recommendable that you consider adding a monthly fee for your store's marketing efforts to your product costs.

Make market research

First, dive into the habits of your target group. How much do they generally spend on products like yours? Try asking your closest friends (that belong to the same target group) how much they will spend on your products. That will give you an idea of the variable costs you can offer.

Second, it's time to find out what your competitors are doing.

Visit websites that offer the same products you have. Knowing how much your rival is selling their products you can determine if you must decrease or raise your prices.

Choose a pricing strategy

As we said before, there’s not only one magic formula to determine the base price of your products. You can opt for using some of these basic options:

Three Price Points

You must start by establishing three price points:

  1. Lowest price: This price must assure you that you can offer some discounts without having to cut your margin profits.
  2. Logical price: Choose the price that makes sense for your business and your 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 this one, cost-plus pricing. You have to add the product costs with your desired profit margin to increase your retail price.

When using this strategy, remember to choose your profit margin taking into account 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 are continually looking for market trends, customer desires, and seasonal products, this strategy will be perfect for you.

Here the price will change periodically according to the time of the year and the best-selling products of the market.

Test your strategy

Set your mind at rest if at first, the strategy you choose doesn’t succeed. 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 the seasonality of your 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 a bit 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 can achieve your goals easier!

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