I launched my women’s clothing line and opened my boutique in Chicago when I was 25 years old. When I priced my line I couldn’t imagine that someone would pay more than I would for something. My life-stage had a big impact on what I thought the market would bear in terms of price.
If I wouldn’t pay $250 for a dress and my friends wouldn’t pay it either, I thought no one would. I made the mistake of putting my values about what something is worth onto others. Not to mention that in my case I didn’t have any real, deep-down, in-my-core confidence in my product yet.
Therefore I priced so I could give my customers “a good deal”. On some level, all of us play this same game in our heads. We have this dialogue in our heads:
- Is my product really worth it?
- Who would pay the same for mine as they would for (fill in the name of a well-known brand)?
- I’ll just price it low to start and then raise the prices as I make a name for myself.
So here’s what you can do to avoid this costing/pricing dilemma:
- Use a good cost sheet and trust the numbers.
- Do some serious research on who your competitors are and make a grid listing each company, their competitive advantages and disadvantages, and pricing
- Price your product to make a profit no matter what. If you price low with the intention of raising prices later, you risk having to find a whole new customer base!
Luckily for me, a fashion industry insider visited my store 2 days before I opened my business. She noticed my pricing and told me, “Jane, you are selling these things at wholesale prices! You’ll be out of business in 6 months!” After I stopped panicking, I re-priced everything and help my breath that customers would still buy. They did, and my business thrived until I sold it 14 years later.
I read the full version of your setting up story a while ago, and I was just reading this short version of the issue you had.
I have come across a problem that I am really struggling with. I created a product purely by accident. It was something I made and was used in a photoshoot. People asked me where they could by it and I made it for them. I priced it depending on what I would pay for it, what I though would be okay to ask people to pay for it, before I did the maths! HUGE MISTAKE!
I sold quite a few and I made them all myself to order, then I had someone else make them and I ended up making no money after all the expenses and costs etc. I learnt my lesson after someone asked me what the whole sale price for my product was, and I couldn’t tell them because after I worked it all out I realised I had shot myself in the foot, and it was to late.
Now I am trying to come up with new products but the whole experience has scared me. It is really holding me back as I am terrified to make the same mistake again. I was selling something for £35 that should have retailed at around £90 – £100. But I just didn’t think any one would pay.
I am having the problem now that I am worried that my previous clients won’t buy from me any more because as a small independent brand I can’t reach the low retail prices of competitors. Should I start again? I have a whole brand that I spent years working on, but I can’t work out what is the best thing to do.
Great little read. I’m struggling with this at the moment as my line is set to launch this week. My partner and I keep contemplating re-visiting the pricing as we aren’t familiar with buying pieces at the price point we’re at. But I think that’s exactly it. We aren’t familiar with it but lots of people are. Coming from an accountant/finance background, I’m definitely putting trust in the numbers!
Awesome, Patricia! Hopefully, telling you about my mistakes will help you avoid the same issues.
to Jane and Nicole:
It is magnificent of you to share your knowledge with others. I just started to read … and wanted to express gratitude to you and others like you that acknowledge your experiences will be helpfull to others and take the time to do so…
blessings toall of you!!!
Thank you for the kind words, Patricia!
Wow, when I read that you didn’t think anyone would pay more than you would, my head went Ding ding ding! That’s exactly what I do and I’m not very rich. Great article, thank you!
So glad it made something click, Cecilia!
I think so many of us go through that! And it’s hard when we don’t really know the people who we want to be our customers. Here are 2 things you can do:
1) Go hang around a Mercedes dealership for a while to remember that there are people who can afford things you cannot (I’m not kidding about this…)
2) Do what one of my clients did. She got a job in a high end boutique (on Saturdays only) to get to know and understand this customer. It was AMAZING for her – great customer research.
Can you suggest a costing sheet please? This was such a good read!
Great article about just being a true pro! I think the other valuable thin about being honest with a good cost sheet is that if your pricing truly is too high chances are there is something in the cost sheet you are overpaying for. If you just reduce the price someone might be overlooking a supply chain problem rather than a pure pricing problem.
I had another question related to your article. I am a co-founder of a new bridal design label called Sunjin Lee (www.sunjinlee.com). We are very interested in opening a retail boutique but retail leases are expensive! The landlords also dig into my financials pretty deep and want to see a ton of cash it seems.
How did you manage to open up a boutique when you were 25? That is so amazing and awesome! I feel like I must be doing something wrong.
Thanks for you time,
Good question. I did not qualify for my first retail lease on my own. I had to have a co-signer and luckily I had a family member who was willing to do so.
How/where can one obtain a good costing sheet?
There is a cost sheet included in my “Start a Fashion Business Course: New Designer Program”. Actually, Startup Fashion Community members get a 15% discount (there is a code in the Community site). You can find the Program here: http://fashionbrainacademy.com/blog/e-learning/new-designer-program/
Kudos to you for having the courage and the pricing confidence to raise prices when it was necessary. I know this can be scary but it sounds like it was vital to the health of your business. Thanks for your comment!
Spot on Jane!
I am having that same dilemma. You are right, do your research and trust your numbers. We have increased our price recently (not something I’d recommend though) and are selling more and to brand new customers that we were not able to reach before.
Thanks for this great post.