Psychological Pricing for Your T-Shirt Business
Pricing can be one of the hardest factors for a t-shirt business, or any business for that matter. There are so many elements that go into your pricing and your sales can be a direct result from your pricing. The life of your business may depend on your pricing choices.
If you’re like many business owners, you’re constantly battling the thought whether your prices are too high and therefore losing sales. You drop the prices to get sales. Then you’re wondering if you dropped too low and losing too much money. If your profit margin is not high enough, your business won’t be able to stay afloat. The question remains: how do you price for sales and profits?
Pricing is a crucial piece of your marketing plan. In fact, it is one of the 4 P’s of the marketing mix (Price, Product, Promotion, and Placement). It is not to be taken lightly. There are whole strategies and jobs that revolve around this one aspect of marketing. It could be how your business competes, and at the end of the day, determines whether you can open your door the next day.
Unfortunately, pricing is not an exact science. There is no secret formula that tells you exactly how much to sell your products for. There are studies and strategies out there, and that can help you get an idea on where to begin.
We’ve all heard the basic formula on pricing your custom t-shirts: t-shirt cost + transfer cost x 2 = selling price. This equation is a great starting place for your business, but every area and niche will vary. Just to name a few, your own prices will fluctuate based on competition in your area, the market demand, the amount of disposable income your area has, among many other factors.
After you have determined your basic price points where you can compete for your area and niche, there are a few strategies out there that may give you an extra boost. Here are a few of those “psychological pricing strategies”.
Ending in 9
We’ve all seen this method in use. Reduce your pricing by a penny so it goes from $3.00 to $2.99, for example. As studies have shown, your brain then sees the price closer to $2 instead of $3. This seems to only work in cases that the left digit changes, like in this example, 3 changed to 2. In the case of $5.50 to $5.49 would not see a significant increase in sales, since the left digit of 5 still remained at 5. A similar tactic, is to go from $20 to $19, for example.
Ending in 0
Instead of ending in 9, some studies have shown that pricing that ends in 0 have increased sales. This seems to be the case in which compared prices were not ending in 9. The reasoning for this strategy is that the brain can process these prices faster and can make a decision based on feeling. Depending on how you have positioned your t-shirts, sometimes buyers are looking for more of a prestigious shirt, which these types of prices can give that perception as well.
BOGO, or Buy One Get One, is a strategy in which the consumer buys because they see getting more. Take this strategy and make it your own. Use the same concept, but instead of offering a free shirt for every one they purchase, try offering a free cinch sack with the purchase of 10 or more shirts.
Try placing similar items side by side with different prices. For example, if you have a crew neck and v-neck t-shirt, price them differently. Psychologically, this will engage the buyer in making a decision to buy one or the other.
Another strategy in comparative pricing is to offer various “levels” of pricing. Again, depending on your market, place items next to each other with prices based on which one you want to sell. If you live in an area where bargain shopping is prevalent, put your normal priced shirt next to one that is priced a little more. This will steer a buyer to your lower priced shirt, which is the one you wanted to sell.
Conversely, some people do not want to buy the lower priced items. They feel quality is associated with price. In this case, place your item that you want to sell next to an item priced lower. To these types of buyers, they will want to buy the higher priced shirt because they perceive it as better. This concept is known as price anchoring. It can also be used in the good-better-best scenario.
As simple as this sounds, research has also shown that the simpler that pricing looks, the better it looks to consumers. For example, more people will buy an item that is shown as $1299 rather than $1,299 or $1,299.00.
In addition, if you are having a sale, try placing the sale price next to the normal price in a different size and color. People will visually see the drop in price, which has also shown to help sales. It goes back to that idea of price anchoring. If you don’t show the original price, there is nothing for the consumer to compare the new price to and may not perceive it as a bargain.
There are several ways to boost sales through psychological pricing. To learn more on any pricing strategies, try an internet search.
Be careful how you use some of these studies and strategies. You can always test your pricing to see which ones your own customers buy from the most.
You want to find that sweet spot of your highest margins and the most a consumer is willing to spend for your products. If you go too low on your pricing, your margins may not be high enough to stay in business.
Don’t forget, you’re in business to make money. After all, just like Mr. Potter told George Bailey in It’s a Wonderful Life, “Are you running a business or a charity ward?”