How should I set the prices for my new clothing brand?
I just started my own clothing called Crowns Clothing Collection that I want to sell at an affordable price for my target market. Crowns Clothing Collection is targeted towards teens and young adults in the Southern California region. The cost to make a shirt is around $5-$7 dollars, and $10-$12 dollars to make a sweatshirt. Based on my target market and manufacturing costs, how should I set the prices for my new clothing line?
The first and foremost thing you should do is a competitive analysis. And then, according to the data you've got, you can set up your own prices. When I was starting my first online store Ninacloak this tactic helped to find out lots of useful info.
It all depends on your products and how you are going to produce them. As for me, I do some printing on men's shirts and other clothes. It is not too expensive, so my prices are pretty low too. Think about it ;)
This is a question I get all the time, since Im in clothing mass manufacturing. Some fo the answers did cover this, albeit in some cases in a complex way.
For your clothing items, the general market average right now is to price your products at (2.4 x production cost). This is for the retail cost of your products. But this figure is only an average. We work with a few designers who sell their products on their eCommerce sites for as much as 8 x production costs. Depends on their market and consumer purchasing power.
Now you can factor in your full business operations costs.
There is some fantastic advice in these previous posts regarding pricing for your product. Rather than rehash what has already been said, let me take a different stance:
1. What problem are you trying to solve?
2. Have you identified a customer pain point?
3. How does your product add value to the customer?
4. Can you provide a solution to the customer's problem?
5. Does your product bridge the gap between 1 - 4?
1a). Are you providing an affordable clothing collection to young teens & adults is SC region? or;
1b). Creating radical street wear sold exclusively to the hipster community.
2a). Why have you chosen this market, the clothing type and geographic area?
2b). You've identified that branded clothing in SC is under-represented, disparate, of poor quality or unaffordable for youths.
3a). Ignoring price - what's the Unique Value Proposition? How do you differentiate your product from competitors?
3b). Gives the customer a sense of identity (i.e. related to Universities, Tech companies, surf and skateboard culture, etc.)
4a). How does Crowns Clothing Collection do this?
4b). SC - Triple C (aka. Southern California - Crowns Clothing Collections) is more than just something to skate in, tackle a wave or be seen in at a frat party. Wear the only badge of honour.
5a). How does shirts & sweat shirts at affordable prices achieve this?
5b). SC- Triple C - our shirts will make you sweat, our sweat shirts will test you to your limits. No skater or surfer of repute would wear anything else. Are you as tough as SC - Triple C?
Once you have established the above, you can follow the steps outlined in textbook pricing policy (at cost + markup, low margin and high volume strategy, high margin and low volume strategy, loss leadership, product differentiation, etc.).
If you can't articulate the value (from the customer's perspective, not yours) - you are fighting a losing battle - irrespective of price.
Feel free to take the above with a grain of salt - I do not have a marketing or sales background professionally. Perhaps it spurs you to ask the key question - what problem am I solving for? (Hint: it has nothing to do with price).
Hopefully this helps in some way. I wish you all the best of luck with your endeavours.
Pricing will also depend on your distribution channels If you are only going to sell online then your pricing would need a different margin than selling wholesale to retail stores. First decide your distribution channel (s) to determine how to price. Don't forget to add both fixed (design costs, material, stitching etc) and variable costs (salaries, rent & marketing etc.) into your pricing model. Work it all out on a spreadsheet first to see if you can be profitable bearing in mind the market price for similar products.
I always figured double the wholesale...And make sure you include a % of the profit added on after all the other costs are calculated...
Please usu price algorithm. Price =material+transportation +daily utilities +promotion+profit+stitching
First, understand your real cost. Cost of manufacturing is just part of that equation. Figure out total cost of delivery of product to consumer with all overhead both pre and post sale. Then, keep it simple by using a basic concept of "price sensitivity to demand." This means pricing your product to recover your cost then monitor demand. If increasing demand can lower your cost manufacturing and thereby increase profits, fine. But at some point, you will recognize that raising prices to a level of desired volumes for efficiency will help you realize more business goals.
Clothes make a statement. And a good design should cater to that. It's not the first step to decide how customers can afford your clothes but whether customers who have money will wear them! Then apply downgrading to catch the lower income market.
If you have the competition in mind, perhaps matching their market retail price will give you a fair idea and you are product is better and unique then it will help you gain confidenve in your pricing. This way you ensure your operating margin is futuristic. Not commenting on your manufacturing cost though sound way too unique, not sure how your target market will impressionate it.
An average mark-up for most retail stores is 40%. I'm just guessing, but 10 dollars is way too cheap and you won't be able to build a brand. What are your costs?
I do not know how accurate your figures are, and whether they have taken into consideration all the production costs. I will assume that you have.
You will now have to find a channel to get the items from your room to the consumer. Each channel will have its unique cost system.
You may desire to show your range to a store that stocks a range that is popular to your target market.
You can sell on consignment, i.e. you leave your merchandise with the store to sell on your behalf. This way people coming into the store are able to see your range, and try it out. There is no risk to the store, and therefore no reason for the store to force a lower price on you as they try to minimize the risk of the merchandise not selling.
Do listen to the shop advice on selling price; they have the experience.
If you sell directly to your friends, you may have to use a comparative pricing method; look at what similar lines sell for, bearing in mind that your brand is unknown and needing to be worn and seen and admired on bodies and not mannequins!
If you want a wide distribution, you may consider a deal with a retail chain; be careful because the retail buyers are ruthless and will try to have your merchandise below your cost line...The ultimate aim is to have a range that is profitable and desirable. So your current pricing is going to be more informed by your strategic objectives at this time, than full profitability.
I hope this helps.