Now that you figured out your cost of your product or collection you need to decide on a retail price.
Let’s recap from our pricing for profitability post last week. Say for example, if you are making a handbag and a spool of thread costs approximately $2. You find that you only use a portion of the spool of thread so you estimate it costs 20 cents per tote to use this thread. You add this and other material costs, the costs of your labor and time, and other business costs to determine how much this item costs to make. That is your cost of goods.
To determine the retail price here’s a simple formula:
Multiply your cost by 2.5. So if your cost is $4 multiply by 2.5. Your retail price would be $10.
The next step is to compare this retail price with goods similar to your in the marketplace. Is your product priced higher? That is ok maybe you have an unusual design and can warrant that price! Pricing and determining the value for your items or collection has to start with you. If you are hesitant that a customer will shy away from your product due to price, be creative on how you can communicate that this product is worth it! Educate the customer on why your product is worth it!
So we’ll leave you with a handy fashion insider tip: It is much easier to lower your prices than raise them in the future.