I often get asked by my clients how to set prices for their fashion brand’s products. First of all, I want you to understand that in fashion, price not only refers to the amount of money being paid for a product.
Price also refers to the so-called ‘value’ the brand creates in a consumer’s mind. When a consumer pays money for one or many of your products, it automatically sets the idea what he or she is getting in terms of design and quality.
This idea plays a significant impact on how your brand is perceived. So making a mistake at this stage could possibly create problems for your brand’s reputation.
How to set prices for products?
What I recommend for my clients is to always start small and never rush things when setting pricing for your brand’s products. It may seem like a trial and error method at first, but it’s crucial to start with the amount a customer would be willing to pay.
Never go too high with your prices for your products, or you risk scaring off potential customers. Chanel, Louis Vuitton and other giants of fashion may have overblown prices, but at least they have the decades-long reputation to justify it.
So start with that minimum amount and work backwards to calculate how much you’re spending on materials and manufacturing. And don’t forget that you still need to have some profit from each of your products.
Luxury, budget or in the middle?
It would also help to determine what kind of brand you’re developing from the very beginning and set prices accordingly: luxury, budget or value-based pricing.
The latter is used by most amateur brands out there who don’t know what heights they can achieve with their fashion brand. Value-based pricing is basically a very careful mix of quality and price.
Choosing high-quality materials while not overblowing your prices can help you build a long-term relationship with your customers.