Merch sales are an important stream of revenue for many creators. However, if you’ve never sold anything online before, or if you’re struggling to get sales, then you might be worried about how much you’re charging your customers. Underpricing merch could cut into your bottom line, but overpricing it can really hurt your sales.
Here’s a definitive guide to pricing your merch.
1. Add up the total cost of your materials.
The first thing you need to do is add up the total costs of all the materials that went into making your products. Include all of the raw materials, such as fabric or blank t-shirts. Your packaging materials, such as boxes, tape, and shipping labels, should be included as well.
If you haven’t saved all of your receipts, then you can look up the price of your materials online. Try to find them from the same vendors you purchased from, but if you can’t, find prices from similar vendors. Alternatively, you can estimate how much you spent.
2. Factor in labor costs.
Next, factor in whatever you paid anyone who helped create your products. Include any fees you’ve paid designers, artists, or product developers. If you use a manufacturer, add anything they’ve charged you. If you’ve hired people to help you with crafting or packaging your merch, include their wages.
Your promotion expenses should also be factored in. If you’ve hired anyone to promote your products, include those costs. Don’t forget any photographers, models, or influencers you worked with on your campaign.
Additionally, factor in your own labor costs. The work you’ve put towards developing these products is valuable, and you should be compensated accordingly. Start with your area’s minimum wage then increase the amount based on your experience and expertise.
3. Include any overhead.
Your overhead includes any ongoing production expenses that aren’t directly related to the creation of your products. Your main overhead expenses will be your website and domain name fees. Additional expenses may include storage and production facilities or business-related utilities such as your cellphone and wifi bills.
If you don’t factor overhead into the cost of your products, then it will eat away at your profit margin. However, you shouldn’t apply every single overhead expense to the cost of every single product you sell. Rather, disperse your overhead expenses across your different products. For example, you might calculate your website hosting fee into the price of a t-shirt and factor the domain name fee into the price of a hat.
4. Divide by the number of units then add a fifty percent markup.
Once you have the final total for how much money you spent making your products, divide it by the number of physical products you made. The result will be how much each individual product costs you. For example, if you spent $1,000 making a hundred shirts, then each shirt cost you $10.
Next, add a fifty percent markup by multiplying that amount by 1.5 A fifty percent markup is standard in the retail industry, making it a good starting point for pricing your merch. Continuing the previous example, you would price your shirts at $15. After subtracting all the expenses that went into making each shirt, your profit would be $5.
5. Fine-tune your pricing by researching similar products.
The fifty percent markup should be used as a guideline, not a hard and fast rule. You should fine-tune your final prices to help you meet the goals you have for your merch. For example, if your main goal is to increase brand recognition by having your fans wear your channel logo out and about, then you might decrease your prices to make quicker sales. However, if your main goal was to supplement your income due to low ad revenue, then you might raise your prices so that you could increase your profits.
To ensure you’re pricing your merch fairly to both yourself and your future customers, you should research similar products. Don’t look at the prices in department stores or drop shipping sites. Rather, you should look at the merch being sold by creators whose audiences are similar to yours in size. If you want to get an idea of their sales, look at their tagged pictures on Instagram or their Twitter mentions to see how many fans are sharing pictures of their purchases.
The right pricing can help you get more merch sales, thereby getting your channel name out there in the world. Your merch prices should be fair to your fans while not decimating your profits.
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Kristen Harris enjoys listening to a wide range of music, from Taylor Swift to, on occasion, Celtic instrumental. She also spends her time writing, reading, and baking.