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Posted May 7, 2020 | By Cheappins | Learn About Lapel Pins
When dealing with real estate you’ve heard the saying: location, location, location. Well when dealing with custom pins the saying would be: price, price, price.
There are other important aspects of custom pins like esthetics, design, size, colors, and style; but establishing the right price is what keeps you in business. Whether you are selling custom pins as a primary business or a side hustle pricing still matters. Pricing is often the last thing small business owners consider, instead they would rather focus on the design process, the interaction with customers or the website. These aspects are important and certainly the most enjoyable, but without a good price nothing else matters.
If your familiar with the TV show “The Profit” you will understand there are three pillars to a successful business: People, Process, and Price. If any of these are broken, the business typically struggles so let’s give you a simple guide to pricing your custom pins correctly to make sure at least the price component is working correctly.
Gut feel is not one of the steps in the process, and yet it is often the only method used. This will generally lead you to over or under pricing your custom pins.
As a general rule of thumb, you should DOUBLE your cost to establish a minimum price and then utilize gut feel or better yet a little research of competitor pricing to see if an increase in price is justified. Notice it did not say a decrease in price. Regardless of what your competitors are charging you must at a minimum cover your costs.
That said, you might wonder, what is your cost?
Since most resellers of custom pins are not actually producing the pins, determining the cost is pretty straight forward, but remember the unit cost paid to the pin manufacturer is not the only cost you need to consider.
Consider a practical example. You have an online store but your physical location is in Michigan. You order your custom pins from Cheappins in Utah and have them shipped to your location in Michigan. As orders come in, you process the order and ship them to your customers via USPS from your Michigan location. Assuming you order 100 custom pins lets see how your costs break down.
The above list is just one example. You may have other costs to consider. The next step is to total the individual charges to determine your total per unit cost.
Add up the items
Cost #1 - $0.50
Cost #2 - $1.87
Cost #3 - $0.25
Cost #4 - $0.15
Cost #5 – this is not included in the unit cost as it is the shipping cost to the customer and it is best not to double that particular cost.
Total Unit Cost = $2.77
A recommended above you should double your total cost (at minimum) and then add the cost of shipping to the customer, or you may choose to charge a separate line item for the shipping. Either way you need to capture that cost.
Total Unit Cost $2.77 * 2 = $5.54 + $7.00 shipping = $12.54. This is the minimum charge. If your research shows competitors are charging more than $12.54 for similar custom pins it is recommended you increase your price.
If you were to sell all 100 custom pins at $12.54 per pin your total sales would equal $125.40. Subtract out your costs and you would earn $27.70 in profit.
It might seem simple, but you would be surprised how many small business owners move forward unaware. Happy pin selling.