What margins should I put on my products?
I'm thinking about selling clothing merchandise for online celebrities. I'm trying to draw up a financial plan at the moment and unsure of what margins to put on the products? How should I go about making decisions on this? Any help appreciated!!
First off, I'm not a fashion or retail expert so take this with a grain of salt. I would say that all smart fashion retailers are making money off of their merchandise even when you see it 80% off. The math is that a certain percentage will buy at full price, and more follow on as the price drops (perceived as a deal or impulse buy).
The next thing to consider is how recognizable is the celebrity? Do they have a large following? What type of budget do their followers have to spend?
The third item to keep in mind is the quality of the product. If these lines are being promoted or tied to online celebrities the items should match the quality and style associated to the personality.
The last thing to keep in mind is your distribution channels. Are you only planning to sell these items online? If so you may not have to worry about covering the costs of a brick and mortar storefront.
At the moment that covers all that came to mind.
Yee, just a clarifying question - can you tell me a little more of what you are doing... for example, are you acting as sole agent for these celebs or are you acting as their 'marketing arm' and selling online? Are you buying low cost and then onselling? Are they being dropshipped or are you holding them locally?The reason I ask is that different scenarios will mean a different approach/business model.
Easy way to price your goods is to compare it to competitions. Research your competition and find where you are on scale compared to them in terms of the quality of your products. If you're product is better, price it more than competition, and vice versa. As long as the sell price is more than double of your cost, you are doing fine. Adjust price as you go.