Print-on-demand (POD) is an increasingly popular business model for entrepreneurs who want to start an online store without having to manage inventory. POD suppliers will take care of all stocking, printing, and shipping of the products, allowing entrepreneurs to sell a wide range of items without having to keep stock on hand.
If you are just starting a print-on-demand business or are thinking about doing so, you are probably struggling to figure out at what price you should sell your products to cover expenses and make money 💰
Is there an exact method of calculation? 🤔 We know it is not easy at the beginning.
But don’t you worry! In this article, we'll break down all the different costs you must consider when setting your prices. After reading this guide, you’ll have a lot of tools to price your products as best as possible! 🙌
First things first
Before starting any type of business, it is extremely important to research the market and the particular niche you want to target and understand where you are getting into.
Selling clothing, beverages, jewelry, etc. is not the same thing. Neither is it the same to sell in America, Europe, or Asia.
By doing a previous analysis you can gather information and make decisions about:
✅ The price ranges that are handled in the industry.
✅ How your competitors are positioned concerning price.
✅ Government and tax regulations.
✅ What choices consumers have and what they are willing to pay.
✅ How much demand exists for a product (and its corresponding offer).
As a store owner, it’s essential to compare prices of products with similar characteristics. Comparing items of different materials or sizes will not help you. The goal is to be able to establish a price range, which will then serve as the foundation for your pricing strategy.
So, what should you keep in mind when pricing your product? 👇
1. Product Costs 🛒
The cost of producing a print-on-demand item varies depending on the product and the supplier you choose. Some suppliers charge a flat fee per product, while others charge based on the size, color, and complexity of the design.
👉 As a general rule, you should expect to pay anywhere from $10 to $50 per product. This cost will be higher for items that require more intricate designs or printing methods.
2. Website Costs 💻
To sell print-on-demand products, you'll need to create an online store. The cost of building a website varies depending on the platform you choose and the level of customization you require.
👉 Most entrepreneurs opt to use an e-commerce platform like Shopify, which costs anywhere from $29 to $299 per month. Alternatively, you can use a free platform like WordPress, but you'll need to choose a hosting provider, which typically costs $10 to $30 per month.
3. Marketing Costs 🎯
Once you've built your website, you'll need to promote your products to attract customers. This can be done through various channels, including social media advertising, influencer marketing, and email marketing.
👉 The cost of marketing varies depending on the channel and the size of your audience. As a general rule, you should expect to spend anywhere from $100 to $1,000 per month on marketing.
4. Other Costs 📦
In addition to product, website, and marketing costs, there are a few other expenses to keep in mind when starting a print-on-demand business. These include:
Design software: If you plan to create your own designs, you'll need to purchase design software like Adobe Photoshop or Illustrator. These programs typically cost between $20 and $50 per month.
Shipping and handling: Most print-on-demand suppliers handle shipping and handling for you, but you'll need to factor in the cost of shipping when pricing your products. Shipping costs vary depending on the size and weight of the item, as well as the destination.
Taxes and fees: You'll need to pay taxes on your earnings and may also need to pay fees for using certain payment processors.
Tips for Keeping Costs Low 📉
Starting a print-on-demand business doesn't have to break the bank. Here are a few tips for keeping your costs low:
Choose products wisely: Focus on products with high-profit margins and low production costs.
Keep designs simple: Intricate designs can increase the cost of production.
Use free marketing channels: Social media platforms and email marketing are great ways to promote your products for free.
Negotiate with suppliers: Many print-on-demand suppliers offer discounts for bulk orders or long-term partnerships.
Minimize shipping costs: Offer free shipping only for high-priced items or bundle shipping costs into the product price.
Time to choose a Pricing Strategy 🤓
Once you clearly understand the average cost of your product and the associated expenses, it’s time to create an action plan and carefully consider your pricing strategy.
Let's talk about pricing strategies you can choose from 👇.
Taking a market approach, prices are determined based on the level of competition. You need to compare your products with similar offerings in the market and establish a price range accordingly.
Then, you have three options:
Prices Above Average: This approach assumes that you will surpass your competitors and provide your customers with a superior experience. You can offer complimentary gifts 🎁and enhance the quality of your visual content, such as professional photos or 3D presentations.
Average Market Prices: This is a safe and reliable option that allows you to target a broad audience while ensuring consistent profitability. You will operate within the standard price range observed in the market.
Prices Below Average: If you aim to stand out from the competition and attract attention, you can consider lowering your prices. ⚠ However, caution is advised as this approach may result in insufficient coverage of expenses, and customers may question the quality of a cheaper product.
Additionally, there are other pricing tactics you can consider:
Anchor: First we set a fictitious high price and then we announce a lower price that becomes more attractive. You can announce that the price now is lower than before, or launch a special promotion like “30% OFF”!
Dynamic: Decisions regarding pricing are made based on real-time demand. You will need to adjust prices periodically, aligning them with customer needs and market conditions.
You can also appeal to the skimming strategy, where you set an initially high price and gradually decrease it. This approach allows you to generate significant profits while the product maintains its popularity.
The Best Strategy to Raise Your Prices
63% of global consumers say that they want to receive personalized products 😱. The numbers of product personalization are growing at a fascinating rate year by year.
This is a fantastic opportunity to position your business above the market average with higher-quality products and attractive to your customers 🙌
With a product customizer like Customily, you can create completely innovative templates and designs, and allow your customers to create their own products, accessing a live preview before making their purchase.
By creating unique and unrepeatable products that they can identify with 100%, your customers will be willing to pay a much higher price, and you will be giving them an incredible shopping experience 🤩
And if you have any doubts or would like to book a call with our sales team before subscribing, don't hesitate to reach us here!
Remember that you can't start thinking about pricing if you haven't done an analysis and evaluated the costs first ⛔
I know! It's a lot of information to process!
But don't worry, some POD suppliers offer suggested prices on their platforms to guide you and help you get an idea of the margins that a certain product can give you when you sell it.
👉 For example, this Printful calculator shows us an estimated profit margin according to the suggested price of the product and the quantity to be sold annually.
Starting a print-on-demand business can be a cost-effective way to enter the world of e-commerce. By understanding the various costs involved and implementing strategies to keep costs low, you can build a successful print-on-demand business without breaking the bank.
Keep in mind that the price of a product is not static. You can (and will!) change it more than once 🤷♀️. You will also adjust your pricing strategy several times, depending on the season, the competition, and many other factors that impact a business.
But that’s the fun part of it, right? Running a business means adaptability, and pricing your products is one of the processes that will need constant attention, revision, and adjustment🔧
Now you know what numbers to look at to have the best profit possible!
Happy Selling! 🚀💸