Product pricing is one of the most important decisions you have to make for your store.
It covers everything from your business finances to your product’s place in the market—and
it’s not a decision that you’re only gonna make once.
How to Price Your Print-On-Demand Products
Hey, it's Nora from Printful!
Deciding on a product price affects how well your online store performs among competitors,
and how much profit you make.
If you stay 'til the end of this video, I'll show you the 4 steps you need to take when
pricing your print-on-demand products.
I'll also go through the pricing process with a Printful t-shirt as an example.
Before we begin, make sure you subscribe to our channel and tap on the little bell icon
to get notified about our latest videos and never miss out on new ways to make your store
more successful.
Get ready to take notes!
There is no one perfect way to price your products, and there certainly isn’t a perfect
price I can just go out and share with you.
Each case will be different, but in this video I will show you how to approach every pricing
decision with calculated care.
Buckle up for step one—asses your product cost.
The most important objective of your product price is that it needs to sustain your business.
Before you can worry about how you’re priced in relation to your competitors and how your
prices meet customer expectations, you need to make sure you’ve found a sustainable
base price.
If you price your products at a loss, it’s going to be almost impossible to grow and
scale.
That’s why you need to assess your expenses.
Product cost is the total value you spend to create and sell your product.
If you sell print-on-demand or drop shipping products, you’re going to start with the
price you pay for the production of each item.
But there are also other expenses involved.
DESIGN COSTS
If you’re outsourcing design services, one way to take design costs in mind is to divide
the price you pay to the designer with the number of product items you expect to sell.
This is especially crucial if you plan on releasing the design on a limited volume or
as a limited-time offer, since that narrows how much you can profit from that design.
However, sometimes you can’t really be sure how many designs you'll sell.
If this is the case, you can go the other way around and, once you have your price and
know your profit margin, see how many units of your product you’d need to sell to break
even at your chosen price.
This way, you’ll at least know the minimum number you need to sell and can adjust your
profit margin if you think the number is too high.
We’ll go through this process together at the end of the video, so keep this in mind.
If you create designs yourself, it’s tempting to ignore design costs to keep the retail
price low.
Of course, there are many tools that will help you create designs for free, like the
Printful Mockup Generator.
However, that is still valuable time spent on your product, so make sure you’re paying
yourself for it.
My best suggestion is to come up with a realistic hourly rate for your own work.
Then add that to the product cost.
This will also help you evaluate the effectiveness of the time you spend working on your business.
PRODUCTION COSTS
With print-on-demand services, the production cost is covered in the price you pay for each
item.
You can find Printful’s product prices on our Product page, or when adding products
to your store—more on that process later in the video.
SHIPPING COSTS
While your print-on-demand service will ship products for you, it's an extra cost for your
customers.
You need to consider what kind of shipping rates to offer your customers and, if you
choose a flat rate, make sure that covers the rate your POD provider is charging you.
The shipping price will vary based on your product, fulfillment location, and end destination.
Watch our video on shipping to find out how Printful deals with shipping and go to our
Shipping page to see our flat rates.
Another way to deal with shipping is that instead of charging your customers extra for
shipping, you can offer it free instead.
Customers are 4 to 5 times more likely to buy something if you offer them free shipping.
You can do that by including the rates in your product base price so you don't have
to pay for shipping out of pocket.
Even if it makes your product prices higher, shoppers just can’t resist getting something
for free.
You can learn more about that in our sales psychology video, link in the description
below.
Next, we have taxes.
Depending on where your end customer lives, Printful may charge tax on your orders, such
as Sales Tax in the US, VAT in the EU or GST in Australia.
You may also be liable to collect tax from your customers.
Depending on the situation, these expenses may also go into your product price.
The sum may vary from 4% to 10% in the United States and from 17% to 27% in the European
Union, and may be calculated from a different base price in each place.
There is no way to predict the exact rate before you know the location of your customer.
That’s why we strongly recommend you consult a tax specialist on your specific situation
to find out what you need to have in mind when calculating taxes for your product price.
If you want to know more about how Printful calculates and collects taxes, check out our
FAQ.
PLATFORM FEES PER ORDER And finally, to sell online, you’re bound
to use one platform or another.
From ecommerce platforms and marketplaces to payment processors, there are various costs
that you have to keep in mind when setting up and running your online store.
While some of these platforms, like Shopify, have a fixed cost that we will talk about
later, others, like Etsy or eBay, charge you a percentage of your sales, on top of collecting
a fee for each listing you make.
Some payment processors like PayPal are free to create an account on and connect to your
store, but charge a transaction fee.
Make sure you are aware of any fees and put those up with your product costs as well.
STEP TWO: ADD A PROFIT MARGIN
Once you’ve got all of your variable product costs together, add them up and count in profit
into your price.
This is where you can play around and have fun.
Adjust your profit to match or upsell competitors and try out different pricing strategies—more
on them later.
PRODUCT COST + PROFIT MARGIN = RETAIL PRICE
Consider the overall market, and make sure your price still falls within the overall
“acceptable” price for your market.
If you’re selling at a price two times higher than of all of your competitors, it might
be challenging to make a sale.
At the same time, keep in mind the work you put in your store and don’t go too low.
If you’re putting in long hours and the profit margin doesn’t cover for all that
work, you either need to reconsider your margin our how effective you are when working on
your store.
Once the profit margin is set at, let’s say, 20%, it’s time to take in mind other
costs that it will have to cover.
STEP THREE: ADD UP OTHER COSTS
It’s no secret—there are many other costs involved in keeping up an online store, not
just what you have to spend to get the product to your customer.
Fixed costs like monthly ecommerce platform subscriptions and other services, your advertising
budget and internet bill—all of that adds up.
Now take all of your monthly expenses and divide them by your profit margin to see how
many products you’d need to sell in a month to break even.
OTHER MONTHLY COSTS / YOUR PROFIT MARGIN = MINIMUM ORDERS PER MONTH
If the minimum number of designs to sell or the retail price becomes unrealistic, you
have to either adjust your costs or lower your expenses.
Balancing your budget is going to be an ongoing process and you need to be prepared for that.
To sum up, your retail price should consist of all of your product costs plus your profit
margin.
Your product costs may include designing, production and shipping costs, as well as
taxes and platform fees per order.
You can adjust your profit margin as you see fit and what your competitors dictate, but
be sure to take in mind other costs and calculate the minimum number of orders you have sell
to cover them.
When you have this process set up, you can move on to step four—reviewing your prices.
STEP FOUR: REVIEW YOUR PRICES REGULARLY
As I said before, pricing is not a decision that you’re only gonna make once.
While one reason to change up your prices is to make sure you're covering for all of
your costs and your hard work, another is to try out different pricing strategies as
a selling tactic.
Here are some you could consider:
MARKET OR COMPETITION-ORIENTED PRICING I mentioned this before—a big part of picking
your price is making sure that it falls within the overall “acceptable” price for your
market.
You might find sales become challenging if you’re selling at a price two times higher
than of all of your competitors.
But there is a way to pull it off.
To do market or competition-oriented pricing, you have to start off by comparing your products
with similar items on the market and see what the average price is.
It’ll give you an overall idea of the potential price range.
There are three main tactics that you can choose from here:
Pricing above the market average – outrun your competition by adding more value to the
shopping experience.
You can do this by adding free gifts or personalized messages to each order, or go for a higher
quality visual presentation (professional photos, store design).
Pricing the same as the market – this is a safer bet if you want to cover a large target
audience and still make some profit.
This will put you in the same price league as your competitors and you’ll be able to
attract the same customer audience they do.
Pricing below the market average – this way you can undermine your competitors with
more appealing prices, possibly steal some of their customers.
But be careful–if you severely underprice a product, it can fail to cover all of your
costs and even seem sketchy to your customers.
DEMAND OR DYNAMIC PRICING
Demand or dynamic pricing requires you to be constantly in the loop with recent market
trends and customer desires.
Here product prices depend on demand and seasonality, which means you need to change prices frequently.
For example, you could push prices up for hoodies and beanies during fall and winter,
and lower them in the summer.
ANCHOR PRICING Chances are you’ve already seen anchor pricing
in action.
A brand sets up an imaginary anchor price only to immediately announce a lower discount
price.
The discount seems appealing so it’s more likely to boost sales from people scouting
the internet for bargain deals.
DISCOUNT PRICING
Discount pricing is similar to anchor pricing.
The only difference is that the starting price actually exists on your store.
You set up a starting price that is higher than the average market price and then frequently
host sales, drawing in bargain shoppers.
With this strategy, you’ll receive most of your sales in bursts.
Even if you don’t plan on hosting regular sales, remember popular ecommerce events like
Black Friday & Cyber Monday–your customers will expect to see deals on your site on these
days.
So, while choosing a price for your product, leave some room for future discounts.
Don’t put yourself in a situation where any discount would make you cover your expenses
out of your own pocket!
PENETRATION PRICING
With this strategy, you enter the market with a below-the-average price to attract a large
customer base and then gradually raise your price as you grow the number of loyal customers.
You’ll see this strategy in action quite often with startup companies that grow into
market leaders, like Netflix for example.
It’s tempting to sit back and leave your prices as they are, but that would be a mistake.
Demand for your products might rise or decrease, some additional product costs may come along
and your retail product price should always change as a result.
PRICING A PRINTFUL T-SHIRT: EXAMPLE
Now we get to the fun part—actually putting all that we just learned to practice!
For this example, I’m going to price a classic Printful shirt on a Shopify store.
I created a special excel sheet for this; you can find it in the description below and
follow along as we go or create a copy and use it as a basis for your own work later.
Remember that this is only an example of the process you are going to go through.
By the time you're watching this video, any costs I mention here may have changed, so
don’t take them for granted.
Do your own research to get the most accurate cost assessment.
STEP ONE: ASSESS YOUR PRODUCT COST
DESIGN COSTS
Let’s start with the designing costs.
I made this design myself, using Printful’s free sample designs and Mockup Generator.
It took me only about ten minutes to make, but I’m still going to value that time and
calculate my design price.
My hourly rate will be $45/hour and I’m going to multiply that by the time I spend
on my design, which is 1/6 of an hour.
That’s $7.50 for this design.
If I could sell 10 designs like these, that would mean 75¢ per design.
However, I would rather add this to my fixed costs later and see the minimum number of
designs I have to sell to break even.
PRODUCTION COSTS
Next, we have production costs.
While you can see some Printful prices on the Products page, the final product price
for each order depends on factors like production technique, print placement, product color,
size and fulfillment location.
To get the most accurate price, use our product push generator to push products to your store.
For this shirt, I’m going to put a print on the front as well as an outside label on
the back.
Be sure to choose all of the colors and sizes you plan to offer on your store, because different
colors and sizes can have different prices, and keep in mind where your customers are
located to choose the colors and sizes that are stocked at the closest possible location
to them.
My chosen audience is going to be from the USA, so I’m going to keep that here.
Now, after I choose my mockups and product descriptions here, we get to the pricing tab.
As you can see, the Printful price differs, based on size and color of the shirt.
There are four ways to approach this size difference to calculate your production cost.
First, I could price each size or size group as different products.
So this design in sizes XS to XL will cost me $14.98, but it will be $16.43 for size
2XL.
Building prices this way, I’ll end up with a different retail price for size 2XL, which
is not always ideal.
That brings us to the second option.
Calculate the product cost by the most expensive size.
This time that would be $16.43.
If a customer buys an XS to XL size shirt that costs you $14.98, I get an extra $1.45.
If they buy a 2XL, I cover my costs exactly.
This works only if I’m not making low retail prices my selling point—for that, every
dollar counts!
Calculate the product cost by the less expensive size.
If a customer buys an XS to XL, I cover my costs exactly.
If they buy a 2XL, I pay that $1.45 out of my pocket, taking away from my profit, but
keeping my prices low.
And lastly, I could calculate the average cost of all sizes.
Here I’ll sum all of them up and divide by the number of sizes I offer.
That $15.22 in this case.
Now every time I would sell a size XS to XL, I would gain 24¢ to cover for the $1.21 I
lose on each 2XL sold.
For this example, I’ll choose the last option, and consider the cost to be $15.22 before
taxes.
SHIPPING COSTS
To get an idea of my shipping costs, I have to consider where my customers are located.
This is important to me, because I want to offer free shipping for all of my customers
in the USA.
If I go to Printful’s Shipping page, I see that shipping for shirts in the USA is going
to cost me $3.99 and I’m going to add that to my costs to set up free shipping to the
US on my store.
TAXES
As I plan to sell this shirt primarily in Alabama, but don’t have a physical presence
or economic nexus there, I am not liable to collect tax myself and just need to take in
mind the tax that Printful will charge on my orders.
As I said before, the sales rate will vary from location to location, and the exact tax
for each order will be calculated after the order is placed.
However, I looked up the combined Alabama sales tax rate, which is 9.14% and the sales
tax base in this state is Printful’s price.
So that’s $14.98 times 9.14% for sizes XS to XL and $16.43 times 9.14% for size 2XL.
$1.37 for XS to XL and $1.50 for 2XL.
I’m going to pull an average of those rates here as well, as I did with production costs.
That’s 1.39$ I’m going to count in my product cost for taxes.
Remember to consult a tax specialist on your specific situation to find out what you need
to have in mind when calculating taxes for your product price.
PLATFORM FEES
I’m using Shopify and I have to take in mind that Shopify will charge me 2.9% fee
per transaction, plus 30¢ for an order.
I don’t have any other fees per product that I am aware of, so I can go ahead and
count all of these up.
COST SUMMARY $15.22 for production costs, $3.99 for shipping,
1.39$ for taxes, 30¢ to Shopify +2.9% of my retail price to keep in mind.
That’s $20.90 + 2.9% from the retail price.
STEP TWO: ADD A PROFIT MARGIN
Next, I’m going to add my profit margin.
To begin my calculations, I’m going to set that at 20% on top of my costs.
That’s $20.90 + 20% = $25.08.
I’m going to round that up to $26.
Now that I know my retail price, I have to take in mind the 2.9% Shopify us going to
charge my orders, which would be 75¢, making my costs $21.65 and my profit margin $4.33.
STEP THREE: ADD UP OTHER COSTS
Now I have to see what other costs I have in a month.
My Shopify Basic subscription costs me $29 a month.
In addition to that, I bought a domain from Domain.com to look more professional.
That costs me $9.99 a year, which I'll divide by 12 to get a monthly overview.
That’s 83¢ a month.
And don’t forget to add the design costs, which was $7.50.
Let’s add up my monthly costs, $37.33, and divide them by my profit margin, $4.33.
Looks like I have to sell a minimum of 8-9 designs a month to cover all of my costs,
and more if I want to start profiting off of my work.
Remember that this will never be a zero-sum game.
The product costs may still vary from order to order because of customer location, taxes
and other variables, and you may want to change your retail price frequently, depending on
the competition, season or a specific pricing strategy you choose to adapt.
The work has just begun, but you’re on the right path.
Come back to your product pricing strategies on a regular basis—go over your product
costs and see if there have been some changes, try out something new and keep up the good
work.
You can find a checklist of all four steps and the resources I mentioned to help you
along the way in the description below.
What’s your experience with product pricing so far–have you been using any of the strategies
I mentioned?
Let me know in the comments below!
Hey!
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