After the holidays is the time that many businesses re-evaluate their goals and plans for the next year.
Pricing techniques are at the top of the list for 2017 planning. I am already getting questions from readers about appropriately pricing for retail / wholesale sales — and the year is not over yet! So let me talk a bit about pricing.
Typically, I recommend the following formula:
Cost of Good X 2 = Wholesale Cost
Wholesale cost X 2-2.5 = Retail Cost
But often, the formula is not always an exact science for pricing all types ofproducts. And often, the formula does not apply to certain types of handcrafted or one-of-a-kind products (see the following article: Pricing Your Artwork).
Just today, a gal contacted me about pricing her line of personal care products after a store buyer wanted to buy 50 of one of her line. She told me that she didn’t feel she could adhere to the above formula because it would make her retail price too high.
Here is what I suggested:
1. If you make 50 personal care items, your price per unit might be less as you are buying materials in a higher quantity and making them quicker than when you make one or two items.
2. Take a look at your product costs in general. Is there somewhere you can cut? Find bulk pricing for materials? Or develop a system to streamline your production time?
3. If your costs are $1.40 per item, it would not be unreasonable to wholesale for $2.65 and let the retailer mark up to $4.95 — but if you do that, make sure to raise your prices via websites etc. You don’t want to advertise that you are underselling your retail outlets.
4. If natural products are truly superior to most on the market, then package and promote them as high-end products. One way to do this is to call them something other than what they are typically called — which denotes an ‘average’ product. I also suggest you check out similar products in a department store for ideas on packaging and pricing comparisons.
5. I also recommend signing up for my free ecourse on ‘How to Price Your Products’: http://www.selltogiftshops.com/.
Or you can purchase it complete here: http://meylah.com/SellingtoRetailers/how-to-price-your-products
For more articles and information on pricing your products, I suggest the following article:
- Developing a Wholesale/Retail Price Structure
- Appropriate Pricing for the Gift Industry
- Pricing Your Products
- Developing Your Pricing Formula
- Pricing Based on Perceived Value
- Or just read all of my pricing articles!