Episode 26: How do I work out what I should sell my garments for?
TOPICS:
Pricing, customer, Pricing Architecture, perceived value, market position
EPISODE TRANSCRIPT:
Welcome to the Fashion Unearthed podcast. If you need help navigating the fashion industry sustainably, you have come to the right place. I'm your host Belinda Humphrey and my hope is to simplify the fashion industry so that businesses can make the best decisions for people, planet and product.
Hello, and welcome to episode 26 of the Fashion Unearthed podcast. Today's episode is the sixth in the six week summer series, where I answered the most popular questions about the fashion industry. So this is the last audience question I'll answer, back to your regular programming next week. But a little reminder that the new guide I've been working on will launch later this week. So if you're listening to this in real time, today is the last chance for you to sign up to the newsletter to get that exclusive offer head to belindahumphrey.com to sign up and of course, if you're interested in sustainability in fashion, there is always the latest news or inspiring articles each month in there as well. But the offer I'm releasing, I'll only be releasing to those on the newsletter list. And again, if you're just tuning in, and this is the first episode you're listening to a quick disclaimer, this general advice I don't know your exact situation even though I'm answering your question, you still need to consider your own situation.
So today's question comes from someone wanting to know how to price their garments. And there are a few things to think about, ideally, before you even start developing your product. Now there's a lot that can go into pricing. But as usual, I'm going to keep it simple, over complicating things can lead to decision paralysis. So I'll narrow it down to five things that you could look at.
The first is where you want to sit in the market, I went the luxury and I wanting to be more accessible and sit in the middle. Have a look at some similar brands prices and also consider what materials they're using and how much brand awareness they have.
Linking into that, the second thing to consider is are you going to be retailing in your own store, online wholesale, or all three. Also consider if these might change over time. These will impact your cost and therefore your profit margin. So considering this after your retails will help you making product decisions, because you'll have a limit on what you can spend. Deciding on a lower margin, because you're going to do direct consumer or online will make it difficult if the business grows and you want to introduce wholesale for example.
Next, break down your categories into a pricing architecture. That's a fancy industry term for basically making sure that all of your prices make sense to the customer when all the different items are sitting together. For example, you might have three levels of pricing for tops, entry, middle and top price. And you might have two or three price points for dresses. And dresses would always be a higher price point. It would be confusing for a customer to have a shirt at 69.95 and a dress at a lower price.
The next one is perceived value, and it comes into play more-so once you have all of your first samples in, it's common to get all of your first samples in and analyse the look and feel of them to see if the perceived value matches the retail you had originally assigned to it. Perceived value is what the customer will think of as valuable, you might have put all these extra details, or used a very expensive fabric that the customer doesn't recognise or doesn't see as a need. So there might be a mismatch between what the customer thinks they should pay for it.
Finally, consider that your product might not always sell at full price, you might offer a 10% discount for signups or a staff discount. So you want to consider that when you're working on your retail price and work it into part of your costs.
So in summary, number one look at where you want to sit in the market and what pricing your competitors sit up. Number two, consider your current and future business model. Three, assess your pricing for each category and how they relate to the other categories. Four, consider what your customer thinks of as valuable and if that matches what they would be willing to pay for it. And five Finally, consider any signup or staff discount and include them in your costs. And like I said, that's just a general starting point. And you will want to have all that done before starting your product development.
But if you've done all that pre planning and starting to go through the development process and want to take the guesswork out of the costing side of making your garments, there's a reasonably priced costing sheet available in the website shop. It's an Excel document designed for you to be able to enter your retail price US, and then see what your cost price should be, as well as another sheet that lists everything that would go into making your garment. It's editable and comes with a 10 page guide to show you where and how to change things to suit your situation. I'll put a link in the show notes. But if you head to the website shop, you'll find it in there. So that's all for today's episode. I hope you've enjoyed the changing format over these last six weeks and found something useful. And I'd love to hear what you thought of any of the answers to the questions. You can DM me on Instagram @belindahumphrey_ or send me an email at info@belindahumphrey.com. And finally, head to the website to find the show notes or the transcript in the podcast section. Thanks so much for listening. See you next time
Thanks for listening to the Fashion Unearthed podcast. If you want to get in touch head over to belindahumphrey.com or you can find me on Instagram @belindahumphrey_
Disclaimer: Whilst every effort is made to ensure that information is accurate at the time of recording, much like the fashion industry itself, this information may change.