Should I increase my product prices?

I have built a clothing brand and community over the last 4-5 years. My demographic just happened to fall into the ages of 13-18. Over the years I’ve had success by pricing all my products prices as whole sales prices instead of the traditional (4x) msrp price to the public. I never have any sales, as my regular prices are already sale prices. I grossed $150k in 2014 around 30% of that was net. The only problem with this business model is that I will never be able to have accounts with stores. I never will be able to create sense of urgency to impulse buy because they will always know that price.

My question is, should I increase my prices for my brand to be able to get into stores. Or should I continue to undercut the market to still receive sales.

  • When you start out with low prices then most of the customers are you attract will be very price sensitive. So if you raise your prices you’ll upset many of them. Perhaps raising your prices will work out in the long term, but I expect it will be very painful in the short term. Raise your prices, and you may have to grow a new customer base from scratch.

    Brick and mortar stores have a lot more to fear from online competitors (who out-compete them on price) than the other way around. Your profit margin looks healthy, and if you run a lean ship you can make a ton of money by expanding what you’re doing now. Either by growing your existing audience, expanding your range of clothes, or by addressing new demographics.

    To create urgency you can also create limited edition clothing items, or have discounts for clothes of the past season. Or offer loyalty cards, where people get points for every piece of clothing they buy. Young people don’t have much money, but they can become very vocal — and very effective — advocates for your brand. If you can figure out how to mobilize them they could be the key to the growth you need.

  • Like above commenter, I advise you not to increase your price. You started to compete on prices and changing them now is very risky. Clothes at higher prices are a very different business model. Different customers, different distribution channels, different marketing. Don’t kill your current business to create a new one.

    If you have some profit, why don’t you invest it in a different brand ? You can leverage your experience in clothes market while starting something different. This looks like harder work, but you don’t have to risk your whole actual success in a new business bet.

  • I think you’re asking a different question than was answered above.

    As far as I understand it, you have built a decent revenue business by direct selling your product to an audience you’ve acquired yourself.

    What you’re contemplating is whether to start selling your products through other channels like existing bricks and mortar stores – which in turn requires a price increase as said channel will want to make money too.

    I think what you will need to investigate is what drives customers to your product. If the primary driver is price, then you’re going to have to look very hard at how your product compares with what’s in the market. I will also caution that this isn’t a straightforward exercise: having products on shelves is very much a form of advertising/marketing – and one different presumably that what you use now. Channel also generally wants some reassurance that the product will sell – sometimes they’ll be satisfied with your homegrown success, but larger ones will want to see ongoing campaigns like products ads/placement in media popular with your target demographic.

    I suspect that your product really does have at least some brand value, however. It is really tough to compete just on price with the Wal-Marts of the world, much less the direct from China channels that exist now.

  • I think you have a great thing going now, but just need to learn how to increase the sales, and that won’t necessarily mean adding to stores or increasing prices. Selling to stores is a competitive game with hundreds vying for that audience. It’s also not cheap.

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