Build a Price Structure
All right, so that's kind of move on to building a price structure, okay, so we know the market we know our costs what's next. All right, so we need to look at the rest of the pyramid to really understand how everything else kind of clicks into place. All right, so the question can it all be the same price when they be so much easier if everything was the same price just dislike made the world go around with, like, one less thing to think about in the morning. Anything says, like coffee serial everything's the same price it's like is perfect, but unfortunately, no, um you can I guess you decide like different different margins to deal with, but really, if you want to offer different degrees of design, it makes sense to have a different price structure that you're working with because you'll have different amount of work going into a different role. Materials just makes a lot more sense. So I'm going to introduce you to one of my first examples off some great products that I've found on...
hep c and I picked these because not only this general you'll see you'll see a lot of these kind of repeated for different ways and different uses within the site, but I wanted to focus in on on this one to start with because they're all lampshades essentially. But you can see the different amount of work has gone into it. You also have different materials. So the top level, um ah, a lot more intricate in the design. Um, you have the size is exactly the same. You've got fourteen by two by seven point five for both of them. These guys are made from oak, these ones and maple. So you have a top level price of two. Twenty eight e on a mid level of two, seventeen. Thirty nine. Okay, so you're probably going to ask where's the bottom layer because you talked about a bottom layer of the pyramid. So here's, one of the exceptions okay, is these guys they dio they only have really kind of two price structures within that brand. They do a lamp shade without this inner here, which is around about one hundred ten, one hundred to one hundred seven, but they need to kind of one version, but you can buy it without. So these guys are very definitely just like we have two different price structures that we work within and is differentiated by the level of the technique and also the intricacy level. This is a much more detailed kind of laser print when something like this okay so this was kind of like a nice example to show that you know not everyone uses the pyramid is number one it's a set of principles of people work within but also different levels different pricing techniques look at the technicality of the design and also the raw materials khun can change the price another example um so these guys over in europe I believe and they work a lot with kind of campus pillows they have a much bigger bigger product line and I'm going to be looking at that in a later slide for another explanation but what's interesting about this is they've used different techniques of either printing or of um yeah kind of printing that's that's their differential on these questions so this one is one side printed only ok so single side thirty to twenty one we have ah the middle section which is double sided and they have different sizes as well okay double sided thirty nine eleven and they have a hand printed but forty three seventy one so still all pillows based material is the same you can see that the prince is even the same because you have these guys it's the same print one hand printed or not but they have changed the price according to the kind of the level of printing in the type of printing their doing so I thought this was a kind of a great way of just really thinking about a simple product it za pillow at the end of the day this but it's a beautiful pillow ah but by applying different techniques to it you can you can change the kind of the aspirational level of it and also the price of it okay, so this is a good one too if that's what you experience the pricing of greater here's something from the chat room and from the twitter sphere on that okay, so when I was looking at building my price structure for my susie scarves I was looking at really want is have a varied price structure I'm starting out with a product I've never tested before I want to stay kind of quite nimble I want to kind of really try and I want to have the capability of increasing and changing my materials if if I want to go richer a little bit more luxury not to kind of like top level luxury but just to a level where there's there's mohr of it's kind of a differential between the different levels okay, so I'm missing a note here this is still seventy this is disappeared temporarily but don't be alarmed it's still there his program has gone for a coffee break so my price level um I'm staying I'm feel confident of fifty for the bottom layer I feel confident that seventies a starting point for the mid and I feel very confident about the top at one hundred I could still increase it slightly if I want to go to one twenty five and kind of hit the brooks brothers mark but otherwise I'm going to keep it at this level ok, so what's your price structure right now what would you change? This is kind of this is quite an open question so I'm going to keep it quite focused um chris would be good to hear something from the chat room in just a second um fatima how is your pricing structure how did you are you happy with the pricing structure you have right now I, um constantly play around with different pricing structures um currently what I usually do is take the raw cost and well that by three for the whole cell and then times up to right to get the retail and usually that keeps me and kind of like a industry level okay um competitive everything right? And you're you're wrong materials the variable cost I can imagine they depending on kind of availability yeah um I mean the price of silver is kind of um the price of silver and gold erred that there's always a standard that's always known and always changes in fluctuates um dear friends I want retailer I do buy it from in the quantity that I bite in right um and ah I have a little bit of wiggle room with silver I also um when I d'oh the pieces that air casted um use a local artist and she uses all recycled medals okay nai so that's I'd try toe feature her as a special attributes of the jewelry to make it more valuable you know it is recycled. Yeah, ok interesting chris would we have you have some in the chat room so sassy seamstress says that previously I had price to low though they were still a markup but my sales actually increased when I increased my prices, which is a great problem that have yeah so that's working really well? Sandra glover clark says that in the winter my biggest etc sellers are cruciate patterns and hats I have several levels of pricing depending on the yarn type and the degree of difficulty it is to actually create the item and other people are agreeing with that. Hermie says that I hear that a lot if you upgrade your price tag, you'll actually get more customers and also nicer customers maybe that weeds out some of the people at the lower price so they had that experience as well and to find finalize that thought sassy seamster says that she uses two times for wholesale and four times and then does a bottom up method and compares to similar products nice four times for retail yeah yeah, that makes sense it's interesting and they went when when you kind of increase your pricing and you start anything all right but it is too scary to increase and no one's going to buy it and it's all going to go on and then people start buying like wait a minute this is interesting this is in the concept but that kind of falls in line with a whole kind of like price value relationship we talked about earlier is this your building this exclusivity and you know, maybe the prices before a little bit lower than her target market maybe that's why she's more in line now people oh right ok, that could be a good reason to watch that kind of increase the prices and that to get that kind of customer reaction is great it's definitely a good problem to have yeah yeah I know they're not going to complain about that one psychology to the pricing like a lot of the cards stuff that I sell is pretty generically everybody pretty much cells around the same price point so pricing out greeting cards is very fairly simple as far as it being, you know, falling into the category of letter breast printed one or two color card that everybody pretty much stays there on the same spot yeah but then when you get into fifty items yeah that's where you start to get a little variation they also notice too that in selling to people there's a psychology of numbers where there is like that special price that they're still owe ten bucks. Okay, ten bucks. Yeah, wait fifty it's, like twelve. Fifty. I don't know about that. Yeah, it's, like twelve, fifteen miles will be twenty. Yeah, yeah, no, definitely that there's definitely a sweet spot when it comes to come. Surprising. And, yeah, I do believe that the whole kind of psychology of what people perceive is kind of at the right price per value, right? Yeah, definitely. It's, that's, that's, complex back there, that's, a that's a whole other ball game way. Have time for that right thing. The world has time for it. Yeah, there you go.
Once you’ve established your business with a single, successful product, imagining what else to sell can be daunting. You don’t want to end up with a disjointed collection of products, but you do want it to be fresh and exciting for existing customers. In Diversifying Your Product Line, you’ll learn the art and science of expanding your offerings and growing your business.
Susie Breuer is the author of Blue is the New Black: The 10 Step Guide to Developing and Producing a Fashion Collection and in this class she’ll help you generate ideas and make smart decisions about expanding your apparel and/or accessories business. You’ll learn how to:
- Research the market to understand both price and your customers.
- Build a concept and action plan for starting out
- Manage multiple product lines
- Source raw materials and manufacturers
You’ll learn how to accurately assess a product's viability before you waste time and money developing it. Susie will also teach you how to develop a consistent, logical pricing strategy you can use again and again.
Susie makes the complex process of developing a financially solvent product and production plan easy. You’ll get expert-level insights into all aspects of developing a new product and walk away confident that you know everything you need to know to expand your business.