How to Price Your Wholesale Home Decor Products Competitively?
By TOI Staff October 17, 2023 Update on : October 18, 2023
It is vital to price your wholesale home decor products competitively if you want your business to grow exponentially in today’s highly competitive market. To maintain the correct balance between profitability and affordability, you must adopt a systematic and thoughtful strategy.
To help you out, we’ve curated this article to give you a holistic view of various factors and considerations to determine the best pricing strategy for your wholesale home decor items.
Here’s a list of questions that you must ask yourself before starting to introspect how you can correctly price your wholesale home decor items:
- How do you decide what to charge?
- Do you compare your price to the competition or try to undercut them?
- Do you take labor, materials, and profit into account?
- Do you maintain low prices because of concern that raising them may result in lower sales?
You could question what buyers would pay rather than what an item is worth. If so, you are deceiving other vendors with your unfair price and yourself. Customers become acclimated to the low price when too many vendors in a particular niche underprice their goods and feel tricked when forced to pay a fair price.
Factors to Consider While Setting Prices
Here are some factors to think about when setting your prices if you want to move from the bargain basement to profitability:
1. Set your product prices based on the market.
Examining other vendors in your sector is a quick and easy approach to ensure your pricing is reasonable for you and other artisans. Find the average price for 3-5 sellers of goods identical to yours. This can help you estimate the range of prices you might use, but it shouldn’t be used to set your final price. This is just the beginning…
2. Set your product prices in line with your manufacturing expenses.
What are the costs involved in producing your goods? Include all components, such as raw materials or ingredients, hang tags, labels, packaging, taxes and levies, shipping charges (the cost of having the goods sent to you from the manufacturer), and so on. Variable costs are the name given to them frequently. Additionally, there are fixed costs, such as rent, utilities, storage, etc. Incorporating fixed costs in pricing isn’t advised. Instead, Step 4 will automatically include these.
3. Set your product prices based on your labor costs.
You are not compensating yourself for your labor expenditures if your price solely covers material costs. Your expertise, product originality, and product details determine this. To assess something other than hourly income, consider how much you would like to pay yourself each month (or year) and use that figure.
4. Price in line with your business plan
Consider all of the factors while deciding on your final price, like the intention to limit sales to your e-commerce website or if you wish to resell them to other retail establishments. Remember that fulfillment houses charge a set price plus a percentage for each shipment, in addition to storage and packaging costs, and that distributors and wholesalers take 10-15%.
The simplest method for setting prices for your goods is as follows:
(Labour + Materials) x 2 to 2.5 = WHOLESALE PRICE
You are protected because the x2 to 2.5 also accounts for your earnings and overhead. You’ll be closer to 2.5 if your goods are in the luxury or elite category. You’ll be nearer to 2 if they are well-advertised.
You must also consider that if you intend to sell your goods to other retail establishments. Your wholesale price will often be increased by at least two times by your retailers.
Retail price (MSRP) = wholesale price multiplied by two to five.
Assume you are a jewelry maker, and the materials and time it takes to manufacture a necklace cost you $10. On your website, you should charge $40 to $50 in retail prices and $20 to $25 in wholesale prices (to retailers).
Pricing your products effectively is critical to guaranteeing your company’s rapid expansion in the cutthroat wholesale home décor market. A deliberate and systematic strategy is needed to balance profitability and affordability. To assist you in choosing the optimal pricing plan for your wholesale home décor items, this article has given you a thorough overview of several different elements and considerations.Read more: How to Price Your Wholesale Home Decor Products Competitively?