When you’re running a print-on-demand business, one of the most important decisions you’ll make is how much to charge for the products you offer. Pricing has a huge effect on many aspects of your company; it affects your cash flow, performance relative to competitors, profit margins, and costs.
You might be intimidated by the prospect of pricing your product or service, but it’s a crucial step. Most entrepreneurs are frustrated by the challenge of determining how to price their goods or services, so this problem can cause them to postpone launching their business or taking it to the next level. So don’t let that happen to you.
While testing and launching with actual customers will yield the best pricing details, you still need to open your store with prices that are reasonable. If you don’t want to rely on just speculation, search the internet for data on how much others charge for similar goods.
In this article, we’ll discuss print-on-demand product pricing strategies, dos and don’ts, and insider knowledge. You will be able to choose the best approach and choose the final pricing for your items after reading this post, which will eventually provide the answer to your query about “How to price print-on-demand products.” Let’s get going!
Step 1: Calculate the cost of your product
Your business must be strengthened and sustained; thus, that is the most important reason for your product prices. The most crucial requirement is that your prices must live up to the expectations of the client. For this reason, you need basic pricing that is both sustainable and profitable. It’s impossible to expand if your prices are designed in a way that puts you at a loss.
This is the primary justification for why you absolutely must examine your business. You have to take into account reviewing every facet of your enterprise. Print-on-demand business All print-on-demand expenses, including the cost of designing and taxes, must be taken into account by business owners. There are additional costs involved as well. Let’s look at each one of them individually:
- Designing costs
Based on three factors, you may estimate the expenses of designing:
- Design Fees for Each Product
One method of calculating design expenses is to charge for designs per product. You can calculate this by dividing the amount you pay the designer by the anticipated sales volume of the product. It is essential if you intend to release the design in a short amount of time and limited quantities.
Most Appropriate For: Outsourcing out design work
How to Calculate: Design Cost /Number of Designs you Expect to Sell = Design Cost per Item
- Calculated by Minimum Orders
Let’s imagine you chose the price for a product. Next, determine the minimum quantity you must sell in order to adjust your profit margin. Adjust the number as necessary.
Most Appropriate For: Retail Products that are in season
How to Calculate: Design Cost/Profit Margin = Minimum Orders to Sell
- According to the Hourly Rate
Despite the fact that there is numerous print design software that allows you to make designs for free, it is still a good idea to estimate the cost of your hard talent. Create a reasonable hourly rate and include it in your product pricing.
Most Appropriate For: Companies who produce their own designs.
How to Calculate: Your Hourly Rate X Design Time = Design Cost
Customizable items increase sales. Adding product customization as a USP will make your customer’s online purchasing experience more enjoyable.
- Cost of Production
Another significant component of your Print on demand expenses is production. The next step would be the production of the orders after you have the designs. This is also an important factor when choosing your print-on-demand supplier / partner. Do your research to get the best prices and deals on high quality products. If you’re going to produce your own products, the cost of production comprises two components:
- Costs of Printing
You must include the amount spent on printing. You must charge more for any particular kind of printing that you provide. The costs associated with supplies, equipment, materials, and other costs are included in the basic printing expenses. Consider establishing a fixed pricing per item for the raw resources and supply.
- Costs of Software
To sell online, you must inevitably use a platform. It would be best if you considered all of these expenses, including those of payment processors and e-commerce platforms. In contrast to some platforms, like Shopify, which have a fixed fee, others charge you a particular proportion of your sales. Consequently, transaction fees are charged by payment processors like PayPal. Make sure you are aware of these prices and policies.
The cost of delivery is the next item, which comes after the basic idea of pricing per shipment. Offering clients shipping for a range of things at the same price is a terrific strategy to gain their business. You can also calculate the shipping cost per item by dividing the supplier shipping cost by the quantity of the goods you purchase.
The location of your end customer affects the taxes. Sales tax in the US, VAT in European nations, GST in India and Australia, etc., are only a few examples of the various taxes that apply in different places. These charges must be accounted for in your product prices because you could be required to charge tax to your customers.
You may now calculate your print-on-demand expenses and determine how much money you’ll need to invest in order to produce a good. Let’s now examine several approaches to product pricing.
Step 2: Select a Product Pricing Plan
Make a game plan now that you are aware of your print-on-demand charges. Some of the best methods for product pricing are listed below:
- Pricing Driven by Competition
To gain a general notion of the possible pricing range, begin by comparing your products with similar products on the market. There are three basic strategies you can use:
- Pricing Higher Than the Average
Gain an advantage over your rivals by enhancing the buying process. Include freebies, unique messages, and other things.
- Pricing Consistent with the Market
A safe bet is to price similarly to the market. This is the best option if you need to reach a wide range of target consumers while still turning a profit.
- Pricing Below the Average in the Market
Sell products and services of the same caliber but for a lesser price. With this method, you can overtake your rivals and get an advantage in the market. Nevertheless, proceed with caution because if you drastically underprice a product, it could seem shady and might not make enough money.
- Anchor Pricing/Discount Pricing
In general, anchor pricing involves creating a fictitious anchor price and then announcing an immediate lower discounted rate. Customers are more inclined to purchase your products because of the discount because it seems more tempting to them. Therefore, it is more likely that the companies will increase their sales.
An excellent illustration of anchored pricing is this Apple iPad Pricing Video. Steve Jobs explains how much the iPad will cost in the video. In addition to discussing the product’s features, he says that it must cost $999. The $999 price has already been ingrained in consumers’ minds. A short while later, he discloses that the final price will be $499, completely breaking the earlier estimate.
Similar to anchor pricing is discount pricing. The one key distinction is that your store actually has a starting price. You set a starting price that is more expensive than the going rate in the market, and you then offer specials to entice those looking for great deals. With this approach, the majority of your sales will come in waves. This attracts budget-conscious shoppers.
- Demand-Based Dynamic Pricing
You need to be continuously aware of the most recent market developments in order to adopt dynamic pricing. Demand is the only factor that directly influences product prices. This implies that depending on the season; you may need to adjust rates periodically. Numerous airline companies utilize this type of pricing structure. The Amazon Marketplace likewise employs a similar tactic.
- Skimming the Price
The skimming pricing method works well. Typically, you start with a higher market price before gradually lowering it over time. By making money well before a product’s demand begins to decline, brands may take full advantage of the market in this way. The electronics sector is a big fan of this tactic. Prices for the older models must be reduced when they grow dated and are replaced by newer models.
Step 3: Margin of Profit
Now that everything is set up, you have all the necessary information. You should add your profit margin as the final addition. You can experiment with various pricing tactics and change your earnings to match your competitors.
How to Determine the Retail Price is as follows:
Product Cost + Profit Margin = Retail Price
See that your asking price is still within the scope of what customers are willing to pay for that item. If your pricing is twice as high as those of your rivals, you may be losing business. You should also avoid setting the profit margin too low, which would result in a cheaper price. Your profit margin should cover the additional work hours and other expenditures.
Finally, Start Thinking About Your Product Pricing!
Knowing all the print-on-demand prices and tactics will help you choose how much to charge for your products at retail. Start working right away!
Learn more about pricing with our webinar on how to price art prints.