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7th-Keeper · November 19th, 2009

Hi Guys,

I need some help and hope that some of you that have more experience to give more insight.

I've just recently started a clothing label with my friends.

We were stuck on how to price our items.

How have some of you priced yours??

Do you have to keep in mind how much you spent getting the shirt printed and how much you bought the garment for?? etc?

What is a decent profit margin?? 30%? 50%? 100%?

I need help please.

kimura-mma · November 19th, 2009

There are several factors.

Take a look at what similar t-shirts are selling for, and take your target market into consideration. How much can your target market afford to spend on a t-shirt? And try to be objective. Your brand is new, existing brands are more well known.

But to establish a sustainable business (if this is what you are aiming for), you should definitely take into consideration all of your costs that go into producing your shirt. Factor in the cost of the garment, printing, set up, shipping, etc; plus any monthly costs like web hosting, credit card processing, rent, etc; plus any marketing and advertising you need to do. You need to have enough of a profit margin to cover all costs, plus profit enough so you can replenish your inventory as you sell through. Generally speaking you should mark up your shirts 100%, but every business model is different. You need to find what works for you, based on what your goals are.

Flagrant-T · November 19th, 2009

Hi 7thKeeper,
That is always a very interesting question. My personal theory is when you are running jobs for others, you look at profit margin, etc when deciding prices. Running jobs for others 30 to 50% profit margins are acceptable because you are doing a fixed job for a fixed price, therefore risk doesn't factor in (much).

When you are running (or having printed) your own line, you are responsible for selling the shirts, therefor the profit margins should be MUCH higher. I wouldn't even look at percentages when deciding prices. You should look at how much you can charge for a shirt in the market you are going for and then figure where you want to be in that market. If you can make a really cutting edge, fashion shirt that will cost you $4.00 to make, and shirts in that market are going for $25.00, looking at a 50% return ($6.00 selling price) would leave 19 bucks on the table. You really need to look at the market you are going for and what they are getting. Starting out you can be on the low end to get fans (although I don't think Ed Hardy ever did that).

You are accepting much more risk by printing stock before it is sold to get only 30% on each sale. You will probably loose money marking up individual items in you own line by that little, because some inventory will not sell. Even if people love your designs, you'll never guess the size mix perfectly.

Can't wait for others input on this one.

Good luck and GO FOR IT!
Nick

7th-Keeper · November 19th, 2009

Thank you so much Tim and Nick for your very detailed responses.

That's what we were tossing and turning over.

Should we sell low considering we are only new to the scene or should we mark our prices the same as other indie labels that have the same target market?

But I understand completely to what you both are saying and I appreciate your input.

kimura-mma · November 19th, 2009

Quote:

Originally Posted by 7th-Keeper


	Should we sell low considering we are only new to the scene or should we mark our prices the same as other indie labels that have the same target market?

This is a slippery slope. It sounds logical, but it can be tough to execute sometimes. By starting low, customers will expect that price. So when you start raising prices, you may alienate them. So make sure you have a plan as to when and why you are going to raise prices. Are you going to add value to your brand at those points?

Flagrant-T · November 19th, 2009

7:
If you have awesome stuff, I would not necessarily sell low. This is just my opinion so take it for what it is worth. I don't know what your marketing research is, but lets just say the average price for your market is $25. I do not think I'd be more likely to buy your shirt if you were at $20 than $25 if I loved it and expected to pay about 25 bucks. Especially if you are selling online. On the other side, I might think twice if you were at $13 or $35.

I've never had a fashion line (yet), but I've sold original clothing for events and other things. Its a very fine line but I feel you may loose sales by being too expensive, however, I don't think you'll gain many additional buyers for a fashion line by under pricing.

Good luck! NICK

Tim...Awesome site and clothing!!!

7: If you look at Tim's site, I am guessing people are buying his shirts because the awesome prints and the very specific martial arts references. Price would be the least of the factors IF it is priced where they expect it. Without knowing his price, I don't think lowering his price slightly would make someone more likely to buy, the first two factors will.

tskid · November 19th, 2009

I took these sections out of my guide that should help you define your pricing:

3.Defining your target market/value creation
If you have searched through this forum at all, you have definitely seen the word target market floating around. And I think majority of the time it isn’t described in great detail. When we first consider our target market we tend to come up with an age range and maybe a certain group within that age range. Which is certainly the basis of all this but it isn’t everything.
The goal here is target market segmentation. By segmenting your target market it will allow you to create value for your company and for your product. So lets say we have decided we are going to sell to 18 to 24 year old men. That is broad as hell, how are you going to create a product that all 18 to 24 year old men find value in. The answer is you aren’t. So lets create segments. So lets say our segments turn out to be hip-hop trendsetters, skater trendsetters, and just trendsetters. Although these are pretty basic, aim to make your segments as specific as possible. How will we create value for each of these segments? This is the part where your designs influence what your segments will be, but your segments should also influence what your designs are. So for example you may design a shirt hoping to target hip-hop trendsetters, but even if the design is awesome, if they hate it they will not buy it. So that is also important to remember when designing. Also by understanding your segments you can decide what quality and perks you can afford to include and what price point they will be willing to pay.
The main idea I want you to pull from this is that by defining specific segments it will be easier for you to create value for those segments. Also, value creation should be the underlying thing of everything you do with your company because without it you will have no customers. Defining segments also makes it easier to reach them, which we will discuss next.

5.Branding and Brand Identity
If you haven’t noticed, the common theme here is value creation. Branding is one way to create added value and even create enough value to justify a higher price point. A great example would be going from using a Gildan shirt to using an American Apparel shirt. Another big one I would say would be using your own labels and hangtags. Labels and hangtags really show the buyer who you are and they also show that you are a more legitimate operation to retailers and sales reps. Obviously you can go more into depth, and say well are the labels going to be physical labels or a screen printed labels.
With my new company, for example, I plan to go with AA shirts, screen printed labels, hangtags, and full shirt belt screen printing. All of these drive my costs up, but ultimately they should create more value for the customer so a higher price point will be justified.
With brand identity you have to ask yourself what your company’s image is. Why is it that you have certain designs, do your designs have any larger meaning or theme? Do they have roots in other ideas like music? Do they have something unique to offer? I obviously can’t answer those questions for you, nor can I write all the questions down.
With my new company, my identity in the most general sense will be bright colored shirts with ties to city life, and the designs will be rather abstract and out there. But the point is, if my segments can connect with my identity in some way, then I can create value for them and they will buy.

In defining your target market and understanding what will create added value for your segments you should be able to come up with a certain price.

Ill give you an example of the new brand I am working on:
Cost right now for me is around 8 dollars on average per shirt, which isn't where I want to be but its as low as I can get it right now (god dam economies of scale, I hate them) lol

Anyway lets just figure ideally 6-7 dollars would be my cost once I am ordering 1000's of printed at a time. I think my segments would easily go for a 30 dollar shirt based on the following benefits I can offer them:
-All over printing
-Fashion fit, combed ringspun cotton t-shirt
-waterbased ink printing
-fully branded product (hang tag, neck tag, packaging)
-brand image they can relate to
-not to mention kick *** designs =P

Now I would still set a wholesale price of around 15 dollars and a retail price of around 30, unless I can entice retailers with high margins and still make at least 100 percent profit, so drop my wholesale price to somewhere around 12 or 13 dollars.

Hope this helps a little bit.

Also you can check out my full guide at the following link:
The Complete Guide to Starting a T-shirt Company!

And message or post here with any more questions you might have.

-TSkid

Nikelover · November 19th, 2009

it depends upon your target market and the cost of production, like if your target are the students you should price it lower and above the cost of production.

7th-Keeper · November 24th, 2009

Frank your advice was very informative and very helpful!!

To everyone thank you for all your help and wish me and my friends luck in making the right decisions when it comes to this topic.

I'll post up our site once we get things rolling.

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