How do you price the items for your collection? In this blog, I will show you some tips, tricks, and guidelines to follow when developing retail prices to reflect your brand image.

They always say “numbers don’t lie” and it is true. When it comes to branding, your price point matters. In my previous blog, Creating Designs that Align with your Brand, I address the importance of understanding your customers' demographic. Part of that is understanding their socioeconomic background and understanding how much a customer is willing to pay for an item. A piece from your collection ideally has the supplies, production, and profit, and sell-through you desire. 

In order to get to that point let's go through all the costs of a product. When selling a product you  will need to account for  bill of materials, labor costs, shipping costs, and general operating costs. All of those costs will become your wholesale price. Depending on your business structure and marketing,  you might 1.5x, 2x or 3x your wholesale price to develop a retail price. The retail price is the price the customer pays. 

Here is where things get interesting. Some product categories or brands sell better with  higher markups. For example, perfume and jewelry is highly marked up. Sometimes the retail price for perfume and jewelry is marked up 6x the wholesale price. Another example is golf products. When A/B tested golf products have higher sell-throughs at a higher markup  than a lower one. When it comes to markups, luxury and exclusivity can make some items more appealing to the customer. If you have a higher end, unique, revolutionary product a higher markup might be for you. However, that is not to say mass market products do not get sell-throughs. Because an item is priced more affordable it can be easier to impulse purchase. Staple clothing, basics, and items that need to be repurchased often do very well in this price range. 

This is a good time to ask yourself, what do I want my business model to look like? Do you want to sell more in quantity? Or do you want more money from each piece? Selling more in quantity will mean the need to lower your supply cost, labor cost, and operating costs, as well as have a lower margin or profit, to make the item affordable and have mass appeal. Whereas making more money per item gives you a bit more wiggle room for supplies,  labor cost, and operating cost. However, even at a higher price point it is still important to keep within a budget. When you sell less items for a higher price you will need a bigger margin or profit per piece than if you were to sell a mass production. Some of the profit goes back into the business,  Luxury brands like Chanel spend a lot of money on marketing the brand. Direct “buy it now” marketing does not work in the luxury market, marketing will be more subliminal and subtle. It is also possible to operate in a mid-level pricing structure as well, that appeals to both the price conscious customer and the luxury lover, but oftentimes a brand will lean in one direction or another when it comes to their pricing and business structure. 

So what happens when your pricing structure does not align with your branding? How do you get the price to align with your brand image? What you will need to do is establish what is most important to you. You may need to make sacrifices. For example, if producing domestically is really important to you, there might be ways to make up for it in materials, or you might need to raise the retail price of your product. If you do, you will want to conduct some research to see if there are competitors in that price range. Competition is the best way to predict sell-through. If you don’t have any competitors in the price range then you will need to spend time on carefully branding and marketing to an audience that shares the same values your brand does. 

When it comes to brand values It is also important to consider quality when pricing your products. When you purchase a high priced item there is a certain level of expected quality, a certain number of years or times that an item will work. When it comes to mass marketed products there is an expectation of quality but the price point is low enough for the quality to only extend so far. When costing an item, it is important to make sure that the quality, to an extent, is reflected in the price. You can always have a low priced item that lasts a long time but it is usually not acceptable to have a high priced item of poor quality. This will ultimately bring down the trust the customer has with your brand. 

When it comes to costing there are many things to consider, quality, quality values and demographic are a few points to consider. It is important to establish the top priorities when it comes to your product and how you want to structure your company to produce profits. Profitability can allow your brand to grow, evolve and expand.

Not quite sure on how to price your items? V.Mora can help you with costing out your collection to make sure your price is aligned with your brand and your customer. For inquiries please contact: vmorainquiry@vmora.com

And more importantly when it comes to costing, V.Mora can connect you with factories, pattern makers, graders, and several other vendors crucial for determining your pricing structure through our Product Development service. If you are in need of the following Development and Production services: 

• Sourcing 

• Technical sketches 

• Pattern Making

• Prototype making 

• Sample Making

• Fittings 

• Digitizing and Grading

• Marker Making

• Manufacturing

Please contact us at: vmorainquiry@vmora.com