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Welcome to the Merch Entrepreneur podcast. I am your host, Elaine Heney. Today we are going to talk a little bit about pricing. So what is the optimum pricing? Should your pricing change depending on what tier you’re at? And just a little bit of what I’ve found in my experience from selling, both getting started I guess at the 25 tier and moving up, and also seeing what other people were doing at the same time.
So I started in February with 25 T-shirts. Now for … I don’t even know why this was my strategy, but I was like, “Okay. My designs are good. I’m going to price them at $24.99.” That was my strategy. So got through my first 25 tier. Got up to 100. Kept that price. Everything new was going up at $24.99, and things were good. I was kind of coming into the kind of uplift towards Father’s Day so there was definitely demand there. T-shirts were selling. So that was good. I was like, “Yay! I’m doing okay.” I’m making $1,000 or more, $1,500 or whatever it was at that stage per month, and I was pretty happy. I was like, “Yeah. This is going good. This is definite progress. It seems to be working.”
At the same time there’s a friend of mine who’d started … I think they got in a few weeks before I did and I was like, “Okay. What are you doing? Tell me your numbers. Let’s compare and see what’s going on.” So he was making about the same amount of money as I was, but he was pricing his T-shirts anything up to $19.99, so like $15.99, $16.99, $18.99, $19.99. So even though he was making the same amount of money as I was, about, he was selling a ton more T-shirts so he was the first person to get up to $500 much faster than I was, and he also got up to $1,000 much faster than I was.
So I was like, “Oh. Okay. That bugger.” I can see this isn’t working because obviously when you’re in the lower tiers, one of the main focuses that you have to always keep in mind is that you need to be hitting those sales numbers because every time you tier up, you’re going to get a big bump in revenue just because you can upload another 500 or another 1,000 T-shirts, so that really has to be something that you consider when you are trying to figure out what’s the best price for you.
So I started off expensive thinking I was doing really well and, you know, I was doing well but then just when I realized that this friend of mine was tiering up faster than I was purely because his pricing was a little bit different, then I went the other direction. Then I was like, “Okay. I need to catch up. We need to go cheap, cheap and cheerful.” Then I changed my pricing anywhere from about $16.99 to $19.99. How I figured out which price was when I was putting up a T-shirt, I’d do a search and look for the competition and if there was a fair bit of competition already, I would price like $16.99, but if there wasn’t too many then I’d do $19.99.
There was about two or three months maybe where I was paying a lot more attention to how much competition was out there to the prices that my competitors were charging and if everyone was charging like $16.00, $17.00, $18.00, there was no point to me putting $24.95 on the T-shirt because it wasn’t probably going to sell. So I kind of got that dialed in and definitely things started changing a little bit. I was selling more T-shirts so that was really good. I was starting to get tiered up a little bit more regularly, which was really good. But then of course things change again.
Then I got up to the 2,000 tier and I was just kind of reviewing things and going, “Okay. This is good. What am I going to do next?” Or whatever. So what I realized then … I was working out I think the average royalty per T-shirt and because my prices had got pretty low at this stage, I actually wasn’t earning a huge amount on royalty per T-shirt so I think if I sell at $20.00, I get over $7.00, but I was selling at like $16.00 and different prices like that, so I could see my average royalty, really it had started to take a nosedive. But, on the other hand, I had actually managed to tier up by getting extra volume, which was really good, but I decided, “Okay. Time for a change. I’m at the 2,000 tier. I’m going to start putting my prices back up again because now I’ve got the volume, but I want to increase how much money I make per T-shirt.”
From then on, basically, I priced my T-shirts … if I thought there was a bit of competition, I priced them at $19.99, and if I thought there wasn’t too much competition and my designs were kind of pretty unique and different, then I priced them at $23.00, $24.00, $25.00.
So that is what I’ve been doing since then. Kind of seems to have worked. It was nice. It was one of the reasons actually I had quite a big uplift in revenue going from, was it August to September I think it is, just because I was kind of … I don’t think it made me much difference on how many T-shirts I sold really at that stage, but I was just earning more per T-shirt. So that really made a difference in how much money I was earning every month, which was really good.
Sometimes it really depends I think on what tier you’re at. I mean, certainly I did change strategy like two or three times depending on what my goal was, my immediate goal, and sometimes it is easier to increase revenue by raising prices a little bit rather than just trying to get a ton more sales which is a little bit trickier unless you’re just uploading a ton of new T-shirts. Also especially in slow times of the year, sometimes to increase revenue, you can just add on $1.00 or $2.00 rather than trying to get a ton more sales if the traffic is slow anyway.
I don’t know if that was in some way useful. I think I’ve just given you a ton of conflicting strategies, but I hope one of them works. It’s absolutely worth playing with and testing prices. I’ve heard of people who they’ll start low and if they get a sale, they increase it by a dollar, and then if they get another sale, increase it by another dollar, that kind of thing, which could definitely work as well. I don’t think there’s much to be done or much advantage in pricing really, really low because I think if you get really low, people are kind of like, “Ew. It’s really cheap. It must be really crappy. I’ll just play it safe and I won’t buy the most expensive one but I’ll buy the middle range one. It’s probably not too bad.”
So I don’t think having the cheapest T-shirt is the best idea, and probably having the most expensive T-shirt, if it’s in a crowded market, isn’t the best idea either, but some kind of middle ground … I think if you’re starting, the recommended price, $19.99, is perfect. You won’t go too far wrong at all with that price. So definitely it’s interesting to play with. I’d love to hear how you get on if you’ve tried different price strategies. You can pop over to our Facebook group. You can get to it via the Merch Entrepreneur website so I’d love to hear your stories, and what you’ve been up to.
That’s it for this podcast. Thanks so much for listening. Looking forward to seeing you in the Facebook group, and if you have a story that you’d like to share on the podcast, absolutely do get in touch at the website, merchentrepreneur.com, and you can give me a shout over there.
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