Pricing your fashions
You’ve created some brand-spanking new fashions, taken great photos, written the perfect description and now you’re ready to sell. But how do you figure out the price?
I have found that choosing the right price lies somewhere in-between market research, expected earnings, and gut feeling.
One of the first things I learned was that I needed to calculate the total amount of time and supplies that it cost to make an item. If it cost $8.50 in raw materials, plus 6 hours of labor, and I was paying an hourly employee $12 an hour to make my items – then my math was as follows:
$8.50 + ($12*6) = $56.50
My raw cost was $56.50 and I hadn’t taken photos, uploaded descriptions, or done any of remaining work to bring that item to market. Next, I would add 50% to the cost of the item – as a general rule, I never wanted to make less than 50% of my investment. That number could be higher or lower depending on your own expectations and the market you are competing.
Next, I would add 50% to the cost of the item – as a general rule, I never wanted to make less than 50% of my investment. That number could be higher or lower depending on your own expectations and the market you are competing.
So I would start at $56.50 * 1.5 (50% return) = $84.75.
Remember – if you are doing the work, you need to calculate how much you want to earn per hour and calculate that in your raw cost. Also – don’t set your return lower than 10% – you’re better off sitting on your butt and investing in the stock market if your return is that low.
If you’re competing in the ath-liesure market and you want to be a premium brand, then you know you want to be somewhere at the top of the range or slightly above the top of the range for the type of item you are selling.
If you’re in a market that has no competition – say for hand-woven wookie hats with embedded Chebacca sounds everything you put it on – then you’ll need to rely more on gut feeling than competitive research.
Sometimes you just know you’ve got a blockbuster. Your friends rave about it the first time they see it and demand you create one for them. You get Ebay bids within minutes of listing it, and shares on Facebook go through the roof. When that’s the case – push your price up until it begins to slow down sales.
There is no perfect formula for figuring out price – but if you do your research, calculate your costs, and trust your gut – you’ll be on the right track.