Setting the right price for your product
Pricing your product is one of the essential starting points to achieve business success. Many different pricing strategies suit different types of businesses and even segments in the fashion industry. But correctly pricing the product depends on some fundamental factors, including identifying and understanding the target consumer, looking at the competition, pinpointing your brand positioning, and determining the relation of price and quality.
Preferably, your brand should get the pricing right on its launch. But if that did not happen, you need to change course to the right direction as early as possible. To get it right, you need to have a clear view of what you are aiming for with your pricing strategy. Of course, you will aim for profit, but other factors, such as having more customers and expanding your business, should be part of your strategy.
Determining the basic costs of getting a product made, including the packaging, transportation, distribution, materials, and labor, should be the first step. Covering all the costs that your brand will incur is extremely important in order to know exactly where it will stand. Then, calculate the profit margin. An average margin of 60% for your collection is a good number. Here, it is best to consider that some products should have smaller margins than others. For example, pieces with good marketing value often have smaller margins, while core items with a more fixed cost (T-shirts, jeans, etc) often have bigger ones. The core items, usually known as margin drivers, have more significant margins because this allows the brand to discount.
Another thing to take into consideration is the perceived value of your merchandise and market positioning. When the brand strategy comes into play, the pricing strategy can change dramatically. Here you may have to sacrifice margin or increase it.
Today's consumer is very educated about pricing. They can easily compare it online, so getting the price right and being transparent about increasing prices is extremely important.