T-Shirt Marketing 101: Price
Of the 4 P’s of the Marketing Mix (price, product, promotion, placement), I saved price for last. Pricing your t-shirts is a big part of your marketing strategy, and should not be taken lightly. Pricing will determine how many you sell, your margins, and ultimately your profits.
If you don’t set your pricing right, it can really hurt your business. If your prices are too high, you have the potential to lose sales if customers are bidding out jobs. Most of the time, customers are getting price quotes from multiple places. On the other hand, if you lower your prices to get the sale, you run the risk of too low of margins and not making enough money to stay in business.
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In the custom apparel business, questions about pricing come up frequently. How much should I charge for this or that? There is no set structure or formula that will give you the best pricing. It will vary from your area and niche. However, there is a formula that will give you a guiding starting point. You take (your t-shirt cost + your transfer cost) x 2 = your selling price.
This price equation is a just a basic guideline, but by no means a perfect model. There are too many factors to say if it will work for your t-shirt business. We all know the economics of supply and demand. These factors will drive prices up or down. Competition and other outside forces will affect prices. Customer expectations affect prices. Your own costs affect prices. Your other marketing mix variables will especially affect prices. This is where you have to determine your own strategy and tweak it from there. Doing your homework and research for your market and niche is a must and will give you a better idea for your own prices.
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As we said above, your other marketing mix variables will help determine your prices. Your t-shirt prices should not be set without first thinking about your strategy for the other P’s – product, promotion, and placement. These are not 4 separate elements, but are intertwined in each other. Therefore, your prices will come more natural once you determine how your t-shirts are differentiated from others in your market, how you are promoting them, and how/where you are selling your shirts. Your decisions in these areas partly make up your pricing strategy.
Make sure your pricing supports your decisions of the other P’s. For example, as part of your promotion strategy, if you choose to hire a sales team to go out and sell your shirts, you need to take this cost into consideration. In this case, you will not want to position your shirts as the cheapest in town. Your low selling prices will not keep up with your expenses. This is what we mean by your margins and your profits. You will not be in business for very long with low margins, unless you like to work a lot for little money!Unless you like to work a lot for little money, try these pricing tips! Click To Tweet
Pricing can definitely be a challenge because of the custom apparel market. In some areas, it is saturated with t-shirt businesses. This can drive down prices for finished shirts, based on the simple supply and demand model. In other areas, it may not be as much as an issue if there is less competition. However, beware with the internet. Online t-shirt businesses can still take away your local business even if you are a lone t-shirt business in your city or town. The internet has truly made a global market place available to everyone.
Pricing can have a strong psychological effect on consumers. Your price can give a perception of the quality of your t-shirts. Higher priced shirts are usually of better quality, while lower priced shirts are the bargain finds. There are so many studies out there on the effects your prices have on your customers, including the visual representation on the numbers itself.
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These low or high prices will also be determined by how you position your t-shirts. Are you competing on price or not? If you compete on price, you will have to be competitively priced, and you will base your promotions around your selling price. On the other hand, if you choose to have higher prices, you are setting your product apart, not by price, but by other features of the shirts. You are choosing not to compete based on price, but by the benefits of your shirts. In this case, you will base your promotions around the benefits of your shirts.
A way to help set your prices with a healthier margin is to reduce your costs. I know that this is sometimes easier said than done. Take a look at all of your costs – renting a store front, web site costs, design costs, supplies for your business, supplies for your shirts, equipment, labor, utilities, you name it. Are you using your transfer sheets to the best of your ability? This can help cut down your printing costs per each job.
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Pricing is an important variable to selling custom shirts for your t-shirt business. There are so many factors that can affect pricing. To recap, here are a few ways to help determine your own pricing:
- Work your pricing in with the other P’s of your marketing mix strategy
- Start with the basic price equation, and tweak it from there
- Research your market and niche to get a better understanding of what you are up against
- Try setting your prices using psychological methods
- Keep your own costs low for the best margins