How to set the price of t-shirts? It is a very important question for any retailer to ask. And looking for your answer requires the analysis of several factors that are not limited to the simple calculation of figures.
In addition to calculating the cost of the product, you must also research the market and determine the profit margin. On the other hand, the psychology of the buyer is very relevant, and with regard to this, there are also strategies to apply.
Next, we will help you to see how to use all these variants, so that you can effectively calculate the price. Especially for the retail sale of your t-shirts.
Cost -An essential indicator to determine the price of t-shirts
The cost involved in the production and marketing is essential to decide the price of the t-shirts. And to quantify these numbers, you must take into account the calculation of two types of costs:
Fixed prices. They are those recurring and necessary expenses to keep a business afloat. Examples: the rent of the commercial premises, the payment of utilities, licenses and permits, and the salary of the employees.
Variable costs. These are expenses that vary depending on the increase or decrease in production, and supply and demand. Examples: raw material, sales commissions and shipping costs; and in your case, the value you paid when buying wholesale shirts.
Some business strategies involve lowering production costs, to offer more competitive prices. But you must be careful with these types of strategies, because you could end up sacrificing the quality of your products. And it’s proven that customers in the printed T-shirt retail market will typically prefer quality over price.
It’s better to pay more for good quality supplies and make sure the price of the shirts reflects that quality. Don’t let the fear of charging just for what you offer lead you to set low prices. If you do this, you run the risk of giving the wrong impression to your customers. They might think that what you are selling is not of the best quality due to its low selling price.
The formula to consider to set the price of t-shirts
By having the cost, you can already determine the price of the printed shirts, taking into account the profit margin. As a general rule, in any retail market, you tend to look for a 50% profit. The calculation with this margin is very simple. To get a sale price, just multiply by 2 the cost of your t-shirts.
Although this way of calculating a sales price is quick and easy, it has certain disadvantages. It could be, for example, that the resulting value is too high and is not so competitive in the market. So, it is okay to consider other earnings percentages and for this a simple formula is used; and we will explain it to you below:
Retail price=(Shirt cost)/(100-percentage profit )× 100
For example, you want the price of the t-shirts with a 45% markup. If it costs you $ 15.00 each, the formula would be developed as follows:
Retail price=$15/(100-45 )× 100
Retail price=$15/(100-percentage profit )× 100
Retail price=0,27× 100
Analyzing the market will help you determine the price of t-shirts
It is very important to watch the competition. The prices managed by businesses that also offer printed shirts can be a good reference. But this does not mean that it is absolutely necessary to set prices the same or lower them a little to be more competitive. As we have seen, this is determined by different factors.
By studying the competition, you will not only recognize the trends in the custom t-shirt market; You will also be able to identify the strategies that the competition uses to set the prices of the t-shirts. This information will help you see what advantages you have over them, and establish competitive prices that do not affect your profits.
Customer emotions influence much more than you think
When buying a product, reason does not always come into play. If all customers will buy under the influence of rational thinking, it would be easy to price the t-shirts. The task would be as easy as simply calculating a few figures.
But generally, buyers pay more attention to emotions when deciding where to spend their money. Therefore, you should consider other strategies that help set the sale prices of personalized t-shirts. Some of the most effective strategies are:
Avoid the round number in sales prices. It is a psychological trap that will make the client perceive a value much less than it really is. Even if the difference between $ 40 and $ 39 is only $ 1, to the buyer, it will seem like a lot more. This will help you choose a product that appears to you to be much cheaper.
Build t-shirt packages and give them a discount. For example, you could sell a combo of 4 printed T-shirts for $ 100; doing this, each would have a sale value of $ 25, when its normal price is $ 27. With this strategy you win, because you would be selling more and the customer will win, because they get a discount.
For this discounted combo strategy to work, it is important that you also offer the products individually. Keep in mind that there will be buyers who only want a t-shirt. In addition, by offering the individual product, with its full value, the customer can see what the offer of the combo is.
Take advantage of the anchoring effect. You do it by contrasting the original price of the shirt with the one you are charging as an offer. Continuing with the example of the combo, you could show the price of the t-shirts like this: 4 t-shirts at $ 100 $ 108. In this way you create an “anchor” price that your clients will adopt as a reference point to accept the offers.
As we have seen, to set the price of t-shirts for retail sale is a big task. But we hope that with the information we have shared with you, you can fulfill this task effectively.