Effective Pricing Techniques

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:

Save

Save

Save

Save

Save

Save

2 comments for “Effective Pricing Techniques

  1. January 6, 2017 at 4:51 am

    You are exactly who I have been looking for For years I had the idea of selling a beautiful christian poem my grandma wrote that I had engraved on acrylic (5 x 7) but the cost was 17.00 which I thought was way to high if a store would sell it for 35.00
    My idea now was to print it on hard paper so people could put it in a picture frame or is it better if I sold it with a picture frame but those sell also for a cheap one to high price ones.What are your ideas Thanks

  2. January 6, 2017 at 8:38 am

    Hi Tom,

    I would go to a store that sells these types of poems/quotes and see how they are presented. Seems to me there are MANY options available: embroidery on cloth, burned in wood, printed on parchment paper etc. And keep in mind, you don’t have to settle on one option. Your can have a variety of presentations in order to give buyers and customers an option in their price range.

    Good luck,
    Sandy

Leave a Reply

Your email address will not be published. Required fields are marked *


CommentLuv badge