Understanding the price of your product and how much to charge your customers is vital. Pricing has a lot to do with perception, and perception is a reality for most customers. Asking people to pay too much for your product or service and they will not buy; asking too little, your customers assume your product is poor quality. An "optimum price" factors in all your costs and maximizes your margins while remaining attractive to customers.
Pricing is always a question that is asked. Although I feel the pricing is relative to your market and what you feel comfortable with. I do have a basic strategy for pricing, along with a few additional tips to help you decide what your prices should be.
Know the market. You need to find out how much customers will pay, as well as how much competitors charge. You can then decide whether to match or beat them. Simply matching a price is dangerous, though - you need to be sure all direct costs will be covered and that there's enough profit margin left to cover the indirect cost.
Choose the best pricing technique. Cost-plus pricing involves adding a "markup" percentage to costs, which will vary between products, businesses, and regions. Value-based pricing is determined by how much value your customers attach to your product. Decide which approach is most suitable for your products before making a calculation.
Work out your costs. Include all direct costs, including money spent developing a product or service. Then calculate your variable costs (for materials, packaging and so on); the more you make or sell, the higher these will be. Work out what percentage of your fixed costs (overheads such as rent, rates, and wages) the product needs to cover. Add all of these costs together and divide by volume to produce a unit breakeven figure.
Here’s a Guide to Set Your Pricing
Add the cost of the hair + the cost of shipping from the vendor to you + cost of packaging per item = the Cost of Goods. (If there are other cost, factor them also).
Now, add the cost of goods + what you want to make for profit* Typically I suggest adding $50 or more for profit = Your retail price.
EX: $68 *for 18" bundle + 5 (shipping to me) + 3 (average packaging) = $76
$76 + $50 = $126 (Your Price to Costumer)
So, your retail price would be $126, you can round that up to $130, make it lower or higher, it’s completely up to you!
Stay on top of trends in your industry. Prices can seldom be fixed for too long. Your costs, customers, and competitors can change, so you will have to shift your prices to keep up with the market. Keep an eye on what's going on and talk to your customers regularly to make sure your prices remain optimal.
To Accurately Know Your Percentage Mark-Up
TO SEE WHAT THE INDUSTRY IS CHARGING click here