Guide for New Designers
Foraying into the fashion industry is definitely exciting. No matter which stage you are at in your design journey, a challenging aspect is pricing your garments. It is all about setting the right price for your creations. When you sell your products with high profit margins, you may not be able to attract the right kind of consumers. On the other hand, pricing your products too low could affect your brand positioning and influence customer perception. Thus, it’s important to develop a smart fashion pricing strategy. Pricing also determines the fashion designing salary in India. It helps you gauge how much you will be able to make per month by selling a certain number of garments.
In this blog, we will be discussing how to create a fashion pricing strategy for your brand and why it’s so important.
What is a Fashion Pricing Strategy?
Every business has financial goals and the fashion industry is no exception. As the term implies, a fashion strategy helps you set a price for your products and helps you create an intended positioning. A pricing strategy involves several considerations and data points. The truth of a pricing strategy is that there is no standard formula. It’s all a result of thorough analysis and strategic vision. First, the price should reflect the value of the product and also support the business model you’re following. It should correctly position your brand in the market.
Fashion prices are determined by brands that design, manufacture and market the garments and the retailers who sell them. The prices the two entities give can vary. For instance, some brands sell exclusively through retail outlets whereas certain private label manufacturers have tie-ups with contracted manufacturers.
Key Strategies & Considerations to Develop a Fashion Pricing Strategy
Understand your Costs
Before setting a price for anything, you need to understand your costs. Every business usually has two types of costs – fixed costs and variable costs. The former usually includes workspace rent, salaries (if any) and equipment. The latter includes material costs, labour, packaging, shipping and marketing. As a private fashion label or designer, it’s important for you to track every expense. No matter how small it is, make sure you include it. In the fashion world, this is also referred to as a cost-plus pricing model. A brand usually calculates the total cost of producing a piece of clothing and then adds a certain percentage to arrive at the final price. This is nothing but a markup that helps create a desired profit margin.
Select a Pricing Model
To price fashion products, there are several methods you can follow. The first one is keystone markup. In this method, the cost of the product is doubled. For instance, if the product is costing you Rs. 1,000 to make, you can double it and charge Rs. 2,000. This is usually a basic pricing method but is a good entry point for new designers who are still trying to find their product-market fit.
Next, you can even follow a wholesale + retail pricing strategy. For example, the cost of goods to you may be Rs. 1,000. You can sell it to the retailer at Rs. 2,000 and they can sell it to their consumer at Rs. 2,500. The whole point of this strategy is to cover costs and give the retailer a margin.
Value-based Pricing
Another strategy fashion designers use often is value-based pricing. They set prices based on the perceived value to the customer rather than the cost of the product. A lot of luxurious and high-end brands use this model. They first analyse their target market and understand the customer’s willingness to pay. They usually conduct surveys to gauge how much a customer is willing to pay for a certain product. In order to generate such kinds of profits, it’s important for your production costs to remain low.
Consider Perceived Value
When a consumer decides to shop from your brand, they don’t just buy clothes or accessories. Instead, they buy stories, emotions, and status. A few factors that enhance the perceived value are – a unique design, ethical production methods, limited edition designs, exclusivity, and top-notch branding. By adhering to the above, you can price your products a certain way.
Final Words
A smart pricing strategy is that which balances creativity and business. As a new designer, it’s important for you to value your work. Don’t overcharge and at the same time, don’t undervalue your work. A common mistake budding designers make is that they underprice their products in order to compete with fast-fashion brands. First and foremost, it’s important to understand your target market so that you can position your brand/label accordingly. To understand more about fashion, creating a pricing strategy and marketing your products, consider enrolling yourself in dress design courses at private design colleges in India.
