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How to Create a Competitive and Profitable Pricing Strategy

great. Step 2 is now complete.

Now we have a comparison of entry and exit prices. As you know, you are competitive in the fashion brand category.

Step 3 is to capture operational costs.

So if you’re a startup and haven’t launched yet, it’s either an estimate or an actual cost.

See if you are a fashion brand and are making a profit from here. How to sell to new marketsThis gives us pointers on UK, Europe, US and Australia so we can better understand costs and entering new markets but what we need now is local for operating costs listed on the screen .

The cost of goods is therefore the actual cost of the garment itself. Customs duties, VAT taxes, shipping costs, storage warehouse costs, labeling costs, packaging costs in the destination country. This is all costs associated with manufacturing, shipping and delivering that product.

These are the things you need to know to really see if your pricing will be both competitive and profitable.

Now let me show you the steps.

Now we moved to another table. So, in this table, we’re looking at a specific row-by-row collection – the product. So, I’m obviously making these up for Karlie’s shirts.

Seeing the price analysis I’ve done here on this particular shirt will get your point. The competitive prices offered were 45 AUD and 85 AUD. That’s what you need to price your product app competitively against your competitors. Here you can see that Carley’s shirt is 80 AUD. In other words, we are heading towards the upper limit.

Expensive shirt.

All you need to do now is enter your COGS and all costs into a spreadsheet. Similar to this. So most of the time it’s the retail price, the price you want to sell out because you think it’s competitive. We believe the product is worth its price, and we need to know the actual cost of the item.

Then what else do you need to know about freight, extra costs, and packaging? All costs listed on other sheets must be entered here and must be entered column by column. Calculate what the landing margin is. That’s what this column is about. So consider your cost in terms of your freight charges.

Shipping duties in this case are any additional charges not applicable, packaging, labels, etc., and we will actually calculate the total cost. A unique style, that shirt, a curly shirt, this is the total cost. It costs money to make it, ship it, and deliver it. And now what you’re looking at is how much margin, how much profit are you going to make?

If it costs 40 AUD and sells for 80 AUD, we see here that it is almost 50%. That’s the margin you’re trying to make. I can tell you right away that you won’t get any benefit from it. If you just sell your products to your own direct consumers, you get that much profit. No additional costs.

You are purely selling DTC via your website. you are not shipping anywhere. No wholesale deals, no commissions, etc. Accepting a 50% margin is fine.

It’s actually okay.

It’s not the end of the world, but if you have ambitions such as selling globally overseas, I would recommend striving to achieve a 70% landing margin.

This is what all major fashion brands like New Look and Forever New strive to achieve bigger margins.

Obviously, the profit is higher, but if you’re currently achieving a 70% base margin with your current pricing strategy, you can more easily transition to wholesale at any stage or point. Margin to surrender, so to speak.

So I encourage you now. For each row of every product you see based on the price points of your competitors, enter the price points that you think are worth what you just saw, and the price points that you can sell competitively. Enter these prices.

So this can be the actual price or it can be an estimate, an estimate and calculate the landing margin.

So, as I said earlier, we’re aiming for 70% overall. That’s pretty much the goal.

This is how we make sure our prices are competitive. It really boosts profits and hints that if the collection hits 70% all the individual items together he doesn’t have to hit 70%.

Perfect.

So some are going to be 76%, some are going to be around 60%, but all in all, if you have an overall recovery margin of 70%, you’re doing more than the others. , means you can afford to lose some things.

That’s the goal.

This is an explanation for those who are considering wholesale. The reason I say 70% is that if you are selling to Zalando, Zalando can ask you for up to 75% off his RRP.

So, in this scenario, if you deducted 70% and sold to Zalando for 80 AUD, you would only bring back 24 AUD.

So if a product costs 40 AUD to manufacture and you sell it wholesale to Zalando for 24 AUD, you will lose 60 AUD. So you can see in the example below if we achieved a 70% landing margin. Using the exact same calculation of deducting the wholesale margin would yield only a small profit.

The 70% W/S I used as an example is pretty high and I’m hoping to agree on a lower deal if possible, but this is the scenario I’m showing and what you need right now Thing. Do the math and try it out to make sure you get the price point. Your retail price is correct.

Now, even if you don’t deal wholesale, you want to be almost sure of yours.The landing margin is 70%. This is similar to direct-to-consumer sales, allowing you to make wholesale profits in the future.

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