This is a big one.
As designers and artists, your passion is to create beautiful and innovative product. It’s a given that you find joy in the process of creating and sharing these goods with the world, but you need to make money in order to continue on this path. Pricing your creations is not only an important factor in selling to a customer, but also when you sell to retailers. Having a clear idea and layout of your retail price and wholesale pricing strategy will make selling that much easier for everyone involved.
Many people have a lot of trouble figuring out exactly how to price their merchandise. There are three components that are most important in this process and it’s easy as A-B-C: cost to make the product, wholesale price and retail price.
To figure out your cost to make the product, add up your cost of materials, labor, shipping and repping fees (if you have a sales rep). Most people tend to leave out labor costs but this is a legitimate addition. Your time is valuable and must be accounted for! The sum of these factors is “A.”
To figure out your wholesale price, multiply A x 2.2 to get to your wholesale price. We can call this “B.” (Round number to next whole digit.)
To figure out your retail price, multiply B x 2.2 to get your retail price. We can call this “C.” (Round number to next whole “even” digit.)
These numbers are a good starting point from which you can tweak based on a number of factors. Take a look at your competition and know how you are positioning your product in the marketplace. You don’t always want to under-cut them; if you can justify a higher price then go for it! Seeing your various costs laid out will also enable you to identify certain areas you’d like to cut down on if you want your price to be more competitive.
I have worked with hundreds of product designers over the years, and the number one challenge that comes up over and over again is pricing. So you are not alone. Whether you are selling 6 units or 600 units, you need to price for profit. This is the lifeline of your business and requires a bit of science and creativity.
So take action now! Run through this pricing exercise for your product and share your insights here.
Here’s to finding your sweet spot!
xoxo,
Grace Kang
Founder, Pink Olive School
“THANK YOU Grace for the Retail for Designers 12-week group program. It was extremely helpful and eye opening to go through the weekly assignments and coaching calls. I now see more possibilities in my every day connections as it relates to my business and thinking differently, thanks to Grace.”
–Founder, JENSEN WHEELER WOLFE
http://www.thelittleyogamat.com
