If you are contemplating a new line in ANY category – health & beauty, cosmetics, lotions, hair care this applies to you! Also, I want to address some mindset issues of “I can’t charge that much”. Yes, you can and I will show you how and why.
As you price your products take three things into consideration:
Secret #1 – What is the price of my competitors?
Secret #2 – How can I offer value to my customers?
Secret #3 – What do I need to earn on the product?
Secret #1 – There is no industry standard to pricing. The market dictates the price.
This seems so basic but it’s obvious to me that many of my clients don’t take the time to look at their competitors. One of my clients created and amazing line of products and only wanted to sell 3x her cost. So we did some research on the web, HSN and QVC and saw that her competitors were charging x10 of her cost. She was shocked. And then asked, can I really charge that much?
Yes. Yes you can. And here is why: The market dictates the price. Don’t undervalue your product by pricing it too low.
Secret #2 – How can I stay competitive and offer value to my customers?
People are willing to pay for value. Even in a serious recession beauty and personal care industries had growth. All the complaints of “it’s the recession” is just an excuse.
The real factors are:
1. Does your product add value to the customer’s life.
2. Are you promoting your product?
3. Is it priced correctly? Look at the top 3 competitors and see where your products lines up.
Secret #3 – How much do you need to earn from each product?
There are some real cost in producing a product. Your standard COGS (cost of goods) include: packaging, artwork, fill, shipping, fulfillment center, call center and wholesale accounts to take into account.
Example if your product cost $3.00 (with bottle and artwork) and you retail it for $16.00
The wholesaler wants to make 40-50% looks like this:
Your “working profit” is $7.00 if you sell direct then it’s $17.00 – minus advt cost, etc.
The moral is, price your product what the market can bear, add value to your customer’s life and figure out what you need to earn.