How much should I price my Print On Demand products?
This is what every seller should ask before publishing them.
Here are the main steps to follow, if you want to price correctly your Print On Demand products:
There isn’t an ideal price for everything, but there are several methods to determine the right price and the right margins to set.
1. Evaluate The Basic Costs
The main goal is to set a sustainable price level for your business.
Therefore, you can start from the average price applied by your competitors and consider your production costs.
These are related to the cost of “raw” material, which depends on whether you buy a white-labeled product (like in Print On Demand), or a finished one (like in dropshipping).
To those fixed costs, you have to add variable costs which we will talk about later.
If you rely on a professional designer or a paid software, you could track your expenses by dividing the price of the created design by the number of products you will apply it to, and calculate the average cost.
Consequently, you can estimate the margin to apply to cover all the expenses, especially if you’re selling a limited number of products per design.
But if you can’t determine the cost per design, you should alternatively calculate the number of sales it takes to break even the selling price.
For example, if you sell a t-shirt for $20 and your margin is $5, you need to sell 4 t-shirts to break even.
On the other hand, if you want to experiment with some free design software, your costs will be fewer.
Printful, for instance, lets you use its mockup generator tool for free. Of course, don’t expect professional results, but it’s something you could consider if you want to save money.
The production costs are generally very transparent in Print On Demand platforms and are visible at the very moment you select the product you want to customize.
Usually, they represent 70-80% of the final price, depending on your margins.
The costs related to your provider, are generally associated with the payment process, the subscription fee (if you have subscribed one), the percentages withheld from your sales, the additional features you may have purchased, and so on.
Some like Shopify have mandatory fixed costs, others like Etsy or eBay charge you more variable costs.
Delivery costs are borne by your customers. They can vary according to the type of product, their home country (US or extra-US), and the delivery option (ordinary or fast).
Of course, to entice your customers to buy, you could offer free shipping fees. In this case, however, you could raise your margins and possibly charge the cost of delivery (or only part of it) to the final sale price.
It’s a valid tactic for those cheap products which you could offer in upselling next to the main ones.
Lastly, there are taxes. Their amount depends on the nationality of your customers and therefore can vary a lot.
The average range is from 4%-10% for the United States to 17%-27% for the European Union.
However, we recommend you consult a professional to have a clear view of how taxes work.
2. Determine The Margins
Once you estimate all the variable costs, you can start evaluating your profit margins.
They have to guarantee you a reasonable return but, at the same time, shouldn’t exceeding the market average.
During the first stages, at least, we wouldn’t recommend starting with higher prices until you don’t have established a well-recognized brand.
It means that, given the fixed costs, you have to adjust your margins in a way to not overprice your products.
On the contrary, however, you shouldn’t reduce them too much either, since they are supposed to compensate for your work and all the time spent on building your store.
As a general rule, a good starting percentage is 20%: from here you can shift upper in case of hot selling products or lower in case of specific promotions.
3. Consider Your Expenses
Once you have set an initial percentage for your margins, you should count all the accessory costs.
We can mention, for instance, monthly subscriptions (if you use Shopify or certain Print On Demand platforms), advertising promotions, internet bills, etc.
Once you’ve set an amount, divide it by your profit margin and estimate the number of sales to break-even.
If this number is very high, then you should revise your margins or, necessarily, cut your costs.
We recommend reviewing your calculations at least once a month, depending on the average of the products sold.
4. Price Review
Pricing is a component of your success and you need to review it as regularly a possible.
It is generally affected by the average market price, the average sales for a single product, the average costs of your business, and other aspects that we will evaluate below.
Average Market Price
The market price of your competitors’ products, is the first thing to look at during your brainstorming.
To have an overview of this, you should check the popular marketplaces like Amazon, eBay, or Alibaba, and compare similar products to estimate their average prices.
If you’re willing to sell above them, you should add value to your customer’s experience, something that your competitors don’t offer.
For example, you might consider including gift packages, custom gift cards, small gadgets, and accessories in the shipping.
If you’re willing to sell at the same prices, you have a more conservative approach which we generally recommend for the first months.
Instead, if your price is below the market average, you can take advantage of it and create special promotions to attract customers to your store. But be careful not to undercut too much your products as it would lower the perceived quality of those, generating the opposite effect.
This strategy consists of setting a lower than average starting price and gradually increase it as your customer base increases as well.
This is true for new stores and is a smart move to test your target audience.
Make several attempts at different price levels and compare the results after a certain time frame (at least a month).
An effective strategy for promotional purposes is to set a disproportionate starting price and discount it at the true market price.
In this way, that product will seem cheaper to buy as the discount is significant.
However, you have to evaluate it on a case-by-case basis, so as not to appear “crafted”. The starting price should always be reasonable as well as the discount applied.
Customers, driven by the frenzy of the moment, could potentially make bulk purchases at your store with the right promotion.
It’s therefore important to set in advance a sufficient margin for further discounts, which you can apply at the last moment of your promotion.
This tactic is widely used by large distributors and professional retailers.
Demand Market Price
According to the last strategy, you could opt for a more “dynamic” price, in line with recent market trends and the feedbacks of your customers.
This is typical for so-called seasonal products, as their demand varies according to each period of the year.
For example, if you sell swimwear, you might increase their price during summertime; vice versa, if you sell sweaters the right time will be in the wintertime.
We have seen in this article various strategies to determine the final price of your Print On Demand products.
It has to consider all the operating costs and, above all, a reasonable profit margin for yourself.
Then, review your prices every month and shift them according to the volume of final sales (higher if you’re selling a lot, lower in the opposite case).
Are you ready to launch your store?