How Do You Know Your Price Is Right For The Customer?
What is a “right” price for fashion designer’s products?
Many studies have been done, many theories developed, and many mistakes made.
Until now, there is still no way that can make sure you set your pricing precisely correct.
It would require the measurement of many behavioral and qualitative factors, and even an approximation would be possible only with extensive and costly market studies.
While these studies are undoubtedly justified for leading brands and for products like smartphones or cars, we need to find other ways to price well fashion designer’s products with limited data and experience.
So, what’s the solution?
Specifically, to sell your designer clothes – generally, in a limited number of pieces – you want to guess the best price where you can sell all you can produce in a reasonable time.
What academics call price elasticity of demand is nothing else but the logic that lower prices will tend to lead to higher number of sold pieces and the other way around.
Here what’s important…
Put yourself in the shoes and brain of the customer
We know that to be ready to pay for designer’s clothes, your customers need to perceive that your price is fair. Their judgment on your price is directly related to their perception of the value for them.
Price is what you pay. Value is what you get.”Warren Buffet
How do customers judge the value of your products for them?
They do it by comparison.
But you must be wondering now what the criteria are for that comparison, right? We can list the most dominant ones for you to dive into the mind of who fell in love with your piece and is considering buying it… or not.
Maybe that person…
…tries to guess the cost of production based on the size and material of the product
…tries to understand the quality of the materials and the making
…senses the exclusivity of the design and the offering
…feels the impact of the brand image
…has a certain level of trust in the label
…values the availability and presentation of the product
All these processes often unfold spontaneous, quick and unconscious but they do end up with the decision to buy or not.
Most of us would turn away from buying if we would feel to get an equivalent “experience” for a better price somewhere else, but at the same time, customers sometimes also love the new and the experiment!
What the business world calls benchmarking is precisely what we encourage you to do.
Step into the shoes and brain of your customers with a realistic mind, and check the offer of your competitors, of what is available on the fashion market. Then ask yourself the questions your customers may ask themselves.
A “right” price is “fair” and “realistic” at the same time
You will quickly make the experience that your viable price range has narrowed down to an actionable and hopefully realistic range. But be aware, it is up to your judgment.
We are talking about a price range and here is the advice on where to start when offering a new piece. Now that we know that pricing is a lot about guts feeling and judgment, our recommendation is to start at the higher end of your realistic price range to see if you can sell within the timeframe you need.
According to the success of your products, you will be able to adjust the price. In case you were right with your initial guess on a realistic price range, this adjustment will lead you to give discounts up to the point where you achieve the desired level of sales.
We know what you’re thinking…
Yes, this is a tricky topic but it is also highly rewarding, and the value of the experience itself is priceless.
You will soon sharpen your take on the market, on what your customers feel about your products and designs, and on where you want to position yourself vis-a-vis the competition.
And what about pricing transparency?
Being transparent on prices is quite unusual in the fashion industry.
But why not?
It would be difficult to justify for the greatest majority of fashion brands to break up their prices for their customers, explaining the cost structures of their large organization.
That is why fashion companies, and especially the ones in luxury goods, stay very unclear on how their products are made and keep their customers in the dark on how they come up with their prices. Margins that would look unjustified to the customer would feel very irritating and would damage the brand’s image.
As a consequence, sales would drop. No one accepts paying a higher price for a value perceived smaller.
What fashion customers understand less and less, is why they should buy fashion products at higher prices to pay for the logo, the flagship store, the advertising campaign, the PR events, etc., just to give a few examples.
We entered a new fashion world with the internet bringing transparency.
All of a sudden, every customer has access to much more information than ever before. It becomes more and more difficult for brands in any sector to hide anything and some costs, like marketing and branding, become questionable for more and more customers.
And the more transparency customers are used to getting, the more they are asking for.
Some fashion brands have already opted for pricing transparency.
Let’s look at an example. Asket is an online fashion store for men, one amongst many. On their about page, they present the value they bring to their customers, which is what they call “radical pricing.”
We believe people should pay for the craft of a garment, not its logo. So starting Asket, we decided to remove everything that didn’t add value to the product, and invest only in what does. From distributors and wholesale middlemen to traditional marketing and flagship stores. Things otherwise seen as mandatory for a clothing brand of high ambitions had to go. Instead, we focus solely on our online channels, bypassing all the costly steps of traditional fashion, delivering directly to you. The end result is a collection produced with the highest possible quality, but with a price tag way below our high fashion equivalents.”Asket
Online customers are also ready to pay for shipping, in addition to the product price, because buying online saves them time and money. Going to a physical store to purchase fashion involves transportation time and cost anyway.
The best combination for you and your customers
As an emerging fashion designer, this is your chance if you opt for transparency in pricing.
You can show your customers what they are really paying for. This would be a compelling and unique selling proposition, and in this way you build trust. You can do so because you have a lean distribution and cost structure.
Customers love to know that they are paying for the right value. Not only fashion customers. Every customer!
Selling through an online marketplace is also your chance in a very competitive environment. A marketplace puts you in the position of adjusting your prices real time because customers can compare everything directly and that gives you incredible power over your business and your income.
Your fashion business is flexible and lean with no overhead costs, unlike many other established brands Your fair prices make you very competitive, help you to stay in business, and ensure that you earn money with every one of your sales.
Let us know how you are planning to price your fashion designs.
This article is about the 5th step of our essential guide for aspiring fashion designers called: 10 Steps To Success – How to start and grow your fashion business. If you would like to know the 10 steps to make it in the fashion business, you can download that guide for free here.
(Photos from Unsplash: Aidan Bartos, Daniel Von Appen, Bench Accounting).
P.S. FashionTalents is an open marketplace where you create your fashion business in minutes.
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Fanny is the CEO + Co-founder of Fashion Talents, and a passionate and tireless promoter of new fashion designers. She’s on a mission to open fashion business to all talents around the world and drive shoppers, sales, and success to them.