How To Price Print-On-Demand Products
Want to run your own product line? T-shirts, phone cases, stickers, books, dishes — you can create an original look for these and many other items and start selling them online around the world. And you don't even need to purchase materials, store inventory, pack goods, and ship to customers. Just use print-on-demand fulfillment services for this purpose. Launch your online store or app, extend assortment with exciting designs, and set reasonable prices. The last task can be the most difficult, so this is the topic of our article. We will tell you how to set a price for your products, considering all costs.
Table of Contents
Research the Market
Before running a store, research the industry and niche you plan to work in. It doesn't matter what platform you are going to sell on: your own website, an Etsy store, or Redbubble. You need to completely understand the market price for print-on-demand products.
Such marketing research is essential for any company. Provided in advance, it will allow you to learn about:
- The current pricing in the industry;
- price positions of competitors;
- the degree of price regulation by the authorities;
- consumer opinion about prices;
- demand for a particular product.
As a POD store owner, you need to focus on products with the same features. For example, it makes no sense to compare prices for paintings that differ in size or dishes of different types. The goal of such a comparison is to find out the price range. This data will become the basis for choosing a pricing approach, which we will discuss later.
At the first stage, you should not be attached to the price. Now it is important to understand the market situation and take into account key costs. Let's discuss in detail how to calculate product selling price.
Determine the production cost
This kind of cost depends on how the design is developed. If you cooperate with a specialist on an outsourcing basis, you must include these costs in the price. It is a must when it comes to limited products or a temporary offer. The fact is that due to such restrictions, you lose a large share of the profits.
But you cannot be sure that you will sell all designs, especially if it is a seasonal item. To reduce risks, it makes sense to go the other way. First, decide on the price of the product and the desired profit. And then calculate the number of items you need to sell to break even.
If you want to avoid involving a specialist and design on your own, be sure to include this point in the price of your print-on-demand products. Although there are many free design tools, you should value your time.
We recommend choosing an approach to design development wisely: consider not only the features of the product being sold but your financial capabilities as well.
It matters who makes the product when calculating these costs. In most cases, merchandise sellers outsource printing duties to third-party POD companies. To do this, you need to integrate your online store with the selected app and provide interaction with customers and partners. As soon as a customer orders a product on your website, your partner will receive a notification and start printing.
Printful explains the working scheme in this way:
- Your buyer pays you for the goods (in accordance with the retail price and delivery);
- The POD company charges you for order fulfillment, shipping, and taxes;
- Your profit depends on the price you set for each product.
You can know in advance how much you will receive from the sale. Your task is to cover all costs associated with printing and delivery through a third-party company (we will talk about delivery later). Keep in mind that they depend on many factors (product type, size, material, etc.), including the prices of your service provider.
What if you decide to make it on your own? Then you will incur all the costs associated with print-on-demand publishing, which will seriously affect the cost. If you offer exclusive services or a special type of printing, you will have to charge the buyer an additional fee.
In any case, you can compensate yourself for the time and creative energy spent on the project: generating ideas, creating product descriptions, hiring specialists, setting up integrations, and answering customer questions.
As we said above, these costs depend on your partners. Each company has different shipping rates. Most websites have calculators to determine print-on-demand shipping costs depending on many factors, including country, delivery time, type and quantity of products.
Your POD partner delivers your product to the customer. At the same time, the buyer will be charged an additional fee. Your task is to offer customers the best shipping rates. In the case of a fixed amount, it is important to completely cover the amount you pay the partner. Another option is to offer free shipping to attract customers. To not pay for it separately, add it to the price in advance.
A POD company may charge you a tax, which depends on the location of your buyers. For example, VAT in the United States and European countries and GST in India. If you are going to tax your buyers, you can include it in the price. Decide on this considering your situation. Discuss it with a lawyer to find out all the features of calculating print on demand taxes in specific circumstances.
Some platforms (Etsy, eBay) require you to pay a percentage of sales, in addition to money for publishing your ad. At the same time, Shopify offers a fixed price. Payment systems like PayPal charge a fee for transactions.
Accordingly, you can make a profit in only one way: to charge a fee that will reimburse the fees of trading platforms, commissions of payment systems, and other related expenses.
Calculate e-commerce development and supporting cost
When it comes to the cost of creating a print-on-demand business, you have to pay for developing your online store. First of all, you need to hire specialists to create a store from scratch, customize the functionality for your business goals, and integrate with selected POD apps. You may also need technical support, which will also increase costs.
If you want to reduce the cost of setting up store workflows, it makes sense to implement an end-to-end solution. For example, Poldza enhances product creation, order management, customer and partner management, pricing, and discounts. It integrates with the top Etsy and Shopify platforms.
Estimate the marketing cost
The marketing budget usually includes the costs of:
- niche and target audience analysis;
- ensuring the competitiveness of the product;
- informing the client about the product (SEO, SMM, promotions);
- formation of brand image on the market;
- organization of distribution and sales network.
These and other marketing activities should be recorded in your marketing budget. There are two types of it: for product launches and annual. The first document contains the variable costs of bringing a new product to market. The second one reflects the fixed costs of promotion, advertising, and public relations for the year.
According to experts, more than 70% of marketing investments are directed to digital channels. The CMO survey shows that organizations spend up to 13.7% of their total budget on marketing (the amount varies by industry).
Choose a Pricing Strategy
Once you have an idea of the product average cost and associated expenses, it's time to prepare an action plan and think about your pricing strategy and tactics.
You can choose between 3 pricing strategies:
- Market approach. Prices are set depending on the level of competition. You need to compare your products with peers and determine the price range.
- Prices above average. This choice assumes that you will outperform your competitors and provide your customers with a valuable experience. You can offer free gifts and improve the quality of visual content (professional photos, 3D presentations).
- Average market prices. It is a win-win option that allows you to reach a wide audience and always profit. You will operate within the standard price range.
- Prices below average. If you want to stand out from the competition and attract attention, try to lower the price. But you need to be careful because you risk not covering your expenses. In addition, customers may doubt the quality of a cheap product.
- Anchor/discount. In the first case, a fictitious price is set, and then a lower price is announced that seems attractive. The second case is the opposite: the initial is higher than average market values, but you reduce it to attract consumers.
- Dynamic. Decisions are made based on actual demand. You will have to adjust the prices every season to adapt to the customer needs.
- Skimming. You set a high price and gradually reduce it. It allows you to get a decent profit while the product is still popular.
The price may be set more than once. A good reason to change would be an increase in costs. You can also decide to switch to another strategy to experiment with prices.
Add profit margin
How to price your POD product? Calculate the variable costs of the product and add a profit margin. The profit margin should be within the optimal market indicators.
The formula for print-on-demand retail price:
You need to find a balance: profit margin must cover your time and effort, but you should not overcharge. It’s better to stop at 15-20%. Try different pricing strategies at this stage and select the most suitable one.
If you want to set the most reasonable print-on-demand price, be consistent. Analyze the situation on the market, calculate all costs, and set the profit margin at an appropriate level. Remember that you can change the strategy and adjust the price at any moment. Be aware of market trends and customer preferences, and you’ll succeed.