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Pricing Strategy: 5 Steps to Pricing Your Clothing Brand
The 5 essential steps: How to choose the right pricing strategy for your clothing business
If you don't pick the right pricing strategy for your clothing brand, you could leave money and profit on the table daily.
Choosing the right pricing strategy doesn't have to be a mystery. That's why in today's video, I'm going to break down the five essential ways to pick the right pricing strategy so that you can make more sales and profit for your business. We're not just going to scratch the surface.
Today I’m diving deep into the must-know 5 steps to pick a pricing strategy that's tailor-made for your fashion brand.
This is going to be a deep dive. So grab a notepad and let's get started.
What is a pricing strategy anyway?
A pricing strategy is a systemized way to set prices in your business to have optimal revenue. It fosters customer loyalty and gives you a competitive edge. In essence, having a pricing strategy is a sustainable way to have success in your clothing business.
Why do you need a pricing strategy?
Having a strategy is going to create a roadmap so that you know how to price everything within your business. It enhances profitability, and customer retention, and shares your brand value every single day. So let's talk about the five steps that are going to help you decide which pricing strategy is right for your clothing brand.
Step 1 - Identify Your Ideal Customer
Deciding on which pricing strategy is right for your business is more than just about looking at your costs and your ticket price. Let's look at who your ideal customer is and the price that they're willing to pay for products in your business.
Think about whether your customer might be price-conscious or have a lot of disposable income and be willing to pay a higher price. Think about all their desires and needs, the things that they do in their life, what their day looks like, and how essential your products are in their world.
For example, you might have a fashion-conscious customer who's willing to pay any price within their budget for that item that speaks to them.
Or you might have a customer who's more price conscious, who likes to compare and price shop across all categories before they make that purchasing decision.
PS: Before I jump into step number two, make sure to check out my free freebie, and download the Find More Customers Starter kit that I created just for you.
This kit breaks down how to identify your ideal customer so you can discover their needs and desires and all the quirks about your audience that are going to help you price your products accordingly.
It's the perfect beginner overview and intermediate overview that walks you through the entire process, plus some sneaky strategy tips that have helped my clients connect with customers faster. Go ahead and grab my free Find More Customers starter kit.
It's the perfect addition to this video. I'll leave a link for that below.
Step 2 - Find Your Value Proposition
Alright, now that we've identified who your ideal customer is and why they want the products in your brand, and the prices they're willing to pay, it is time to look at what makes your brand stand out in the marketplace. It's time to look at what your unique value proposition is for your business.
Sometimes people call this your USP, your unique selling proposition, but it's the same thing. Your pricing strategy should reflect the unique value proposition that you have in your business. For example, the jewelry brand.
Mejuri Jewelry created a name for itself by offering fine jewelry at a specific price point within the market.
So somewhere between fine jewelry at a higher ticket and costume jewelry at often a lower ticket that's disposable. They sit somewhere in the middle offering precious metals, and gems at an affordable price, and so they filled a void in the market and they've created their unique selling proposition or their value proposition.
And speaking of value proposition, if you're interested in establishing the value proposition in your business and finding a way to stand out in the market, then take a look at my three-part Hero product workshop.
Establishing a hero product in your business is one of the fastest ways that you can find to stand out in the market and become known for something unique to your brand.
The free three-part Hero product workshop is a great way for you to walk step by step in this process of establishing your hero product. I'll walk you through that so you can start to attract thousands of customers and sell with ease because they're going to understand what your brand is all about.
I'll share the clear actions of how to go about doing this in your business, whether you're making a hero product or looking within your assortment to find a hero product that might already be there walking you step by step through the process.
After the three sessions workshop, you'll have your hero product to start to promote and showcase within your business.
Okay, let's jump into the next step.
Step 3 - Understand Your Costs
Whether you're ordering products from a wholesaler, whether you're doing white-label, private-label products, or whether you're making products yourself, it's super important to track the costs of your product.
Knowing what your costs are, consider costs like raw materials and the actual production costs in the industry, we call that the CMT, which is the ‘cut, make, and trim’ that goes into your product if you're a fashion brand.
Could include shipping, taxes, or any of those peripherals, maybe warehousing is part of your cost structure, but knowing and tracking all of those costs is key to understanding how to mark up your product so that you get to your retail price.
Your pricing should always consistently cover your costs in a way that's advantageous to you.
If you want a sustainable business, get into the habit of tracking your costs, and that could be on a spreadsheet or a notebook, but consistently do this and always mark up your products or get, use a method to get to your sustainable retail prices in the same way.
I made a video recently of the 10 Best Pricing Methods to think about for a clothing or accessory business. I'll leave a link here so you can check that out. That walks through the 10 methods that I recommend as inside the industry fashion merchandiser that work for most clothing brands.
We leave out a few of them that don't work for clothing brands, but we focus on the 10 that you need to know about, and there are formulas for some of those pricing methods included in that video. Check it out HERE.
Step 4 - Define Your Commercial Objective
The next step is to think about what your overall objective is. So think about what your commercial objective is for your business. What are you trying to do with your brand and your product? Think of this as your pricing guide.
What your ultimate goal might be to be a high fashion retailer, or it could be to be an accessible brand for everybody. So those two approaches. The ultimate goal of your product and your business might look quite different in actual execution.
You might be a sustainable business. So everything within your brand is eco-friendly, and that is your ultimate goal is to trade as a sustainable brand. So that's your mission.
Think of this as what you want to be known for and how that's reflected in your pricing strategy. For example, let's take a look at a brand like Zara. We all know Zara as a fast fashion brand, but what that equation looks like, their actual commercial objective is to be fast fashion plus low prices equals lots of sales volume. So that's basically what their objective is.
And a brand like Gucci on the other end of the spectrum might have an objective, something like this.
They are high fashion, high quality, plus high prices equal high net revenue.
The actual volume of sales is always important for a brand, but perhaps they're not looking to make as many sales as Zara would, per item, because their net revenue from each item is higher.
The objectives of both brands might look different. It's going to inform not only their price structure, but also their activities, marketing activities, and product choices, all the way down the line. It's important to establish what your commercial objective is as a business so that your pricing can fall in line accordingly.
Step 5 - Monitor and Adapt Your Pricing Strategy
And now, one of the most crucial steps when it comes to picking the right pricing strategy for your business is to know that your pricing strategy is not set in stone. Yes, we need to make some decisions and decide what we're going to do in the next 3, 6, 12, 24 months in your business.
Be ready to adapt your strategy for shifts in the market as well as to adapt, to stay competitive, and appeal to your customers' ways to adapt. Your pricing strategy might look like changing the pricing on a specific item or category to align with the market or shifts that your customer seems to be making.
You could review your costs and look for a new manufacturer to bring your costs down or launch a new product in alignment with market demands.
Think about adding a product or a category if there's a pricing opportunity that your current products don't address. That might be an opening price point item or even a higher price tier that you don't have in your brand, but you want to start to experiment with it for your customers when you see there's a need and there you have it.
CONCLUSION
Those are the five essential steps to picking the right pricing strategy for your business.
Step 1 - Identify Your Ideal Customer
Step 2 - Find Your Value Proposition
Step 3 - Understand Costs
Step 4 - Define your commercial objective
Step 5 - Monitor and Adapt
So, if you’re pondering over pricing decisions, while also considering your audience and product strategy, your search should end now.
Also, I’m here for you every step of the way – just leave me a comment, email me, or request a video for a more in-depth tutorial!
Honestly, I got you!
Lots of Love
WORK WITH ME 👇🏼
ABOUT THE AUTHOR
Trudi Roach specializes in helping small and emerging fashion and accessory brands scale successfully - even without any prior business or fashion industry experience.
A former fashion executive and merchandiser (aka the real Business of Fashion) she led product development for multi-million-dollar fashion brands, crafting a strategy with the Marketing, Sales, and Finance teams. Trudi learned how to run a business, from top to bottom the hard way, through hands-on experience creating products, working with vendors, and launching products, from test quantities to million-dollar programs … every month!
As a fashion brand consultant, Trudi can help you get there too.
