How To Price Your POD Products: Beginner MASTERCLASS Guide 💰

Kittl
22 Nov 202323:01

TLDRThis masterclass guide offers a comprehensive approach to pricing print on demand (POD) products. It emphasizes the importance of understanding production costs, setting a profit margin, and conducting market research to determine competitive pricing. The video discourages the 'race to the bottom' pricing strategy, instead advocating for value-based pricing that factors in the product's perceived value. It also discusses the role of branding and professionalism in setting higher prices and gaining customer loyalty. The guide provides practical examples, such as pricing a t-shirt with a design on both the front and back, and touches on the impact of platform fees, shipping costs, and taxes on the final retail price. It concludes by highlighting the need for ongoing research and experimentation to find the optimal pricing strategy for POD products.

Takeaways

  • 💰 Understand all your costs: Factor in production fees, printing fees, digitization fees, and additional costs for multiple design placements.
  • 📊 Calculate your desired profit margin: Aim for a percentage (30-50% is common) on top of production costs to ensure profitability.
  • 🔍 Research the market: Look at competitors' pricing to gauge what customers are willing to pay for similar products.
  • 🎨 Value-based pricing: Consider the overall value of the product and design when setting your price, not just the cost to produce.
  • 📈 Find the right price point: Use market research to determine where to position your price within the competitive spectrum.
  • 🛍️ Avoid the 'race to the bottom': Don’t lower your prices unrealistically in hopes of increasing sales volume; it’s not sustainable.
  • 💳 Consider additional costs: Factor in platform fees, transaction fees, taxes, and shipping when determining your final product price.
  • 🛒 Use discount methodology: Experiment with discounts and sales to stimulate purchases and emotional response to action.
  • 📈 Adjust for platform fees: Increase your retail price to account for the fees charged by selling platforms like Shopify or Etsy.
  • 🏆 Branding is key: Strong, consistent branding can allow you to charge a premium and attract repeat customers.
  • ✅ Focus on customer service: Providing excellent customer service and attention to detail can justify higher prices and lead to increased sales.

Q & A

  • What does 'race to the bottom' mean in the context of print on demand pricing?

    -In the context of print on demand, 'race to the bottom' refers to the practice where sellers compete by lowering their prices to an extremely low level in an attempt to attract more sales, often at the expense of profit margins.

  • What are the main costs to consider when pricing print on demand products?

    -The main costs to consider include production costs, printing fees, any digitization fees, and additional printing fees for extra design placements or features.

  • What is the recommended profit margin percentage for print on demand products?

    -A profit margin percentage between 30% and 50% is commonly recommended to ensure a healthy profit while remaining competitive.

  • How can understanding market pricing help in setting the price for your print on demand products?

    -Understanding market pricing allows you to see the price range that customers are willing to pay for similar products, helping you to set a competitive price that can generate sales while still achieving your desired profit margin.

  • What is the significance of branding in pricing print on demand products?

    -Branding plays a significant role as it can increase the perceived value of your products, allowing you to charge a premium price and attract repeat customers. A well-branded shop with professional presentation can command higher prices.

  • How can discounts and sales influence customer behavior in purchasing print on demand products?

    -Discounts and sales can create a sense of urgency and evoke an emotional response, leading customers to act quickly to take advantage of the lower price. This can also encourage additional purchases or the sale of bundled items.

  • What are the common fees associated with selling on platforms like Shopify and Etsy?

    -Common fees include a monthly subscription fee for the platform (like Shopify's $29), transaction fees per sale (such as Shopify's 2.9% + $0.30 per order), listing fees (like Etsy's $0.20 per listing for a 4-month period), and possibly taxes.

  • How does the choice between free shipping and including shipping cost in the product price affect pricing strategy?

    -Choosing to offer free shipping can make the product more attractive to customers, but the shipping cost must be factored into the product price. Including shipping in the price simplifies the cost calculation but may affect the perceived value of the product.

  • What is the 'race to the bottom' pricing strategy and why is it considered unsustainable?

    -The 'race to the bottom' is a pricing strategy where sellers lower their prices to extremely low levels to increase sales volume. It's unsustainable because it often leads to very low profit margins and can harm the brand's image by associating it with low quality.

  • Why is it important to consider the number of sales needed to cover subscription fees for a platform like Shopify?

    -Considering the number of sales needed to cover subscription fees is important because it helps determine the break-even point and ensures that the business is viable. It also aids in setting realistic sales goals to cover operational costs before profit can be made.

  • How can the perceived value of a product influence its pricing?

    -The perceived value of a product is a crucial factor in pricing. If customers believe a product offers more value, they are willing to pay more for it. This perception can be influenced by factors such as the product's design, quality, brand reputation, and the effectiveness of marketing and presentation.

  • What role does customer service play in the pricing strategy of print on demand products?

    -Customer service plays a significant role in the pricing strategy as it contributes to the overall customer experience and the brand's reputation. High-quality customer service can justify higher prices and lead to repeat purchases and positive word-of-mouth marketing.

Outlines

00:00

📈 Understanding Print on Demand Pricing

This paragraph discusses the misconception of the 'race to the bottom' in print on demand pricing, where businesses lower prices to attract sales. It emphasizes the importance of understanding all costs involved, including production, printing, digitization, and additional fees. The speaker uses platforms like Printify and Printful as examples of how to outline these costs and formulate the best possible price for a product. An example is given where a t-shirt with a design costs $12 to produce, with an additional $6 for a second design placement, totaling $23 in production costs before considering profit margin.

05:02

💰 Deciding Your Profit Margin

The second paragraph focuses on setting a profit margin, which is the percentage of money added on top of the production cost to gain profit. It suggests aiming for a profit margin between 30% and 50% and uses the example of a $23 shirt with a desired 30% profit margin, which equates to $7. This brings the total listing price to $30. The paragraph also touches on the idea of value-based pricing and the importance of not underselling your product, as well as considering different pricing strategies such as free shipping or including shipping in the price.

10:02

🔍 Market Research for Pricing

This paragraph stresses the importance of market research when determining the price of your product. It advises looking at competitors' pricing and understanding what customers are willing to pay. Using the shirt example, it shows how finding a successful price range (between $28 to $36) can inform your pricing strategy. The paragraph also warns against the trap of underpricing and highlights the value of allowing customers to pay more for a product they desire. It concludes by advocating for a balanced pricing approach that considers both profit and customer willingness to pay.

15:02

🎉 Discount Methodology and Sales

The fourth paragraph explores the psychology of discounts and sales, explaining how they can be powerful tools to increase sales. It discusses the common retail tactic of increasing an item's price before offering a discount to make it seem like a deal. The paragraph applies this concept to the shirt example, suggesting that a discount could be applied to the $32 price point to create a sense of urgency and value. It also mentions that discounts can encourage additional purchases and that there are various discount strategies to experiment with, such as email marketing or limited-time offers.

20:04

The fifth paragraph delves into the practical aspects of selling print on demand products, including additional fees, taxes, and processing costs. It outlines different platforms for selling, such as Shopify, Etsy, and Amazon Seller Central, and their associated fees. The paragraph provides a detailed breakdown of costs using Shopify as an example, including monthly subscription fees, transaction fees, and the impact of these on profit margins. It also discusses the importance of considering taxes and how to factor them into the retail price. The paragraph concludes by emphasizing the need for careful consideration of all costs and the importance of reaching a minimum number of sales to cover subscription fees.

🏆 The Power of Branding and Customer Service

The final paragraph emphasizes the role of branding and customer service in effective pricing. It suggests that a well-branded shop can command higher prices and attract repeat customers. The speaker shares insights from a conversation with Heather Johnson, an Etsy bestseller, about the importance of consistent branding in a competitive market. The paragraph also touches on the importance of professionalism in presentation, attention to detail, and customer service. It concludes by encouraging continuous research and experimentation with pricing, and by promoting the use of design tools like KD to create appealing products for the print on demand market.

Mindmap

Keywords

💡Print on Demand (POD)

Print on Demand (POD) is a business model where products are manufactured and printed as individual orders are received, reducing the need for inventory and upfront costs. In the video, it is central to the discussion of how to price POD products effectively to ensure profitability while considering production costs, shipping, and other fees.

💡Race to the Bottom

The term 'race to the bottom' refers to a competitive scenario where businesses lower their prices to undercut competitors, often to the point of diminishing returns or unsustainable business practices. The video emphasizes that this approach is not a sustainable strategy for pricing POD products.

💡Production Costs

Production costs are the expenses incurred in creating a product, including materials, labor, and any fees for printing and digitization. In the context of the video, understanding these costs is crucial for determining the final price of a POD product without compromising profit margins.

💡Profit Margin

A profit margin is the percentage of revenue that represents a company's profit after all costs have been deducted. The video suggests aiming for a profit margin between 30% and 50% to ensure a healthy profit from POD products, which is essential for the sustainability and success of the business.

💡Value-Based Pricing

Value-based pricing is a strategy where the price of a product or service is determined by the value it provides to the customer rather than its cost of production. The video discusses the importance of considering the overall value of a POD product, including its design and quality, when setting prices.

💡Market Research

Market research involves studying potential customers, competitors, and market trends to inform business decisions. In the video, it is highlighted as a vital step in understanding customer willingness to pay and competitor pricing strategies, which are key to setting the right price for POD products.

💡Discount Methodology

Discount methodology refers to the strategies used to offer price reductions to customers, aiming to boost sales volume. The video explains how discounts and sales can be powerful tools to increase sales by creating a sense of urgency and value for the customer.

💡Additional Fees, Taxes, and Processing Costs

These are extra costs that a seller must account for when pricing a product, including platform fees, transaction fees, taxes, and any other charges that may apply. The video emphasizes the importance of factoring in these costs to ensure that the final retail price covers all expenses and generates the desired profit.

💡Etsy Fees

Etsy fees are the charges associated with selling products on the Etsy platform, which includes listing fees and transaction fees. The video provides a detailed breakdown of these fees and how they impact the final pricing strategy for a POD product sold on Etsy.

💡Branding

Branding is the process of creating a unique name, symbol, or design that identifies and differentiates a product or service from others. The video stresses that strong branding can allow a seller to charge a premium for their POD products, as it adds perceived value and can lead to customer loyalty.

💡Customer Service

Customer service refers to the assistance and support provided to customers before, during, and after a purchase. The video mentions that attention to customer service can enhance the perceived value of a POD product, justifying higher prices and contributing to the overall success of the business.

Highlights

The 'race to the bottom' in print on demand pricing is a myth and can be detrimental to sales.

Understanding all costs, including production, printing, digitization, and additional fees, is crucial for pricing POD products.

Printify and Printful are platforms that help outline costs for better pricing strategy.

An example pricing strategy is given using a base production cost of $12 for a t-shirt with additional costs for design placement.

Profit margin should be decided as a percentage on top of the production cost, typically between 30-50%.

Value-based pricing considers the overall worth of the product and design as a package.

Market research is vital to understand customer willingness to pay and competitor pricing.

Pricing should not be set too low to avoid the perception of poor quality and to ensure profitability.

The importance of not depriving customers the ability to pay more for a product they value is emphasized.

Discount methodology and the psychology of sales are powerful tactics to increase sales.

Retail stores often use increased retail prices followed by discounts to attract customers.

Experimenting with different pricing and discount strategies can help find the most effective approach for sales.

Additional fees, taxes, and processing costs must be considered and included in the final retail price.

Different platforms like Shopify, Etsy, and Amazon Seller Central have varying fee structures impacting pricing.

The formula for retail pricing includes product cost, fees, taxes, design value, and profit margin.

Branding and shop presentation play a significant role in being able to charge a premium price and gaining repeat customers.

Consistent research, trial and error, and attention to customer service are key to successful pricing in POD.

Using tools like KD for design creation can significantly improve the value and appeal of POD products.