For this webinar, we delved into the essential aspects of strategic pricing for your prints. We understand that pricing can be a complex topic, so we thought it would be valuable to share some insights and strategies with you. The agenda for this webinar includes understanding your costs, knowing your market, and considering additional expenses.
If you like reading more than watching, we’ve got you. Read on for all the instructions. You can also jump to any topic you want from the list below.
Before we dive into the specifics of pricing, let’s establish why it’s crucial for your business. At the end of the day, the primary goal of any business is to generate a profit. Profit is the money you get to keep after subtracting your costs from your revenue. Since pricing directly impacts your revenue, it plays a significant role in determining your profitability.
Types of Costs to Consider
When it comes to pricing, there are various costs to consider. These include:
- Product Cost: The cost of the product or service you offer.
- Shipping Cost: The expenses associated with shipping, which you may choose to cover for your customers or pass on to them.
- Platform Fees: If you’re using e-commerce platforms like Shopify or Etsy, they often charge fees for listing, transactions, and more.
- Taxes: Depending on your location and the nature of your business, you might need to account for taxes.
- Time: The value of your time spent on creating and managing your products.
- Variable Costs: These can include subscriptions to design software or other tools necessary for your business.
Let’s begin with the foundational aspect of pricing: product costs. To set the base for your pricing, you should start by determining the cost of the products you intend to offer. Here’s a simple and recommended way to go about it:
- Visit lumaprints.com and make a list of the products you want to offer.
- Go through the entire ordering process for each product to see if there are any add-ons or extras you’d like to offer, such as hanging wires or special finishes. These will add to your product cost.
- Use a tool like Excel or Google Sheets to create a spreadsheet where you list your products and their associated costs, including any add-ons.
Let’s look at an example:
By maintaining a detailed spreadsheet, you can keep track of your product costs effectively.
Once you’ve determined your product costs, it’s time to decide on a markup. Markup is the amount you add to the product cost to determine the retail price. Here are some key considerations:
- Standard Markup: You can start with a standard markup, such as 100% (doubling the product cost) or 200% (tripling the product cost).
- Market Research: Research similar products and stores to understand how they price their items. High-performing stores can serve as a reference for pricing.
- Know Your Audience: Consider your target market. If your products cater to price-sensitive customers, a lower markup might be necessary. For premium or specialized products, a higher markup could be appropriate.
- Premium Products: Some items, like canvas prints, can be considered premium and warrant a higher markup.
Let’s illustrate this with an example:
Lastly, over time, you will see how your customers are responding to your prices. By adjusting your markup to their response and demand, you can tailor your prices to your specific market and product offerings.
In addition to product costs and markup, you should consider other expenses that affect your pricing. These include:
- Shipping Costs: We recommend incorporating shipping costs into your retail prices, as customers are often attracted to free shipping. You can calculate shipping expenses using tools provided by your supplier or carrier.
- Platform Fees: Many e-commerce platforms charge fees for using their services, including listing fees, transaction fees, and payment processing fees. Account for these fees in your pricing.
- Taxes: Depending on your location and business structure, you may need to account for taxes in your pricing strategy.
- Your Time: Don’t forget to value your time. Include the time and effort you invest in creating and managing your products within your markup or additional cost considerations.
Using the Shipping Calculator
To calculate shipping costs, you can use Lumaprints’ shipping calculator.
Enter the product you want to offer along with recommended ZIP codes to cover different shipping scenarios (10001 for New York, which happens to be the farthest state from California, and 04938 for a rural area zip code). This helps ensure that your pricing accounts for potential shipping variations.
Here is an example of how it can look like in your spreadsheet.
Once you’ve factored in all these considerations, you’ll arrive at your suggested retail price. It’s essential to round this price to a figure that aligns with market norms and customer expectations. You can choose to use whole numbers or the “99 cents” ending, which can influence customer purchasing decisions.
In the end, the goal is to balance profitability with competitiveness and market appeal.
Watch this webinar through this link: https://youtu.be/L4PB-PGDUtk?si=3VMOam7dFy4q8w28
All previous and upcoming webinar videos are available on our YouTube channel: https://www.youtube.com/@lumaprints