I know I’ve been MIA for a while because I’ve been concentrating on growing my Facebook community & pouring all my heart & sharing my knowledge with babes in there. But this is one topic that has come up a lot lately & I thought, it’s a good one to make a comeback!
(PS – If you are on Facebook but not in the #babecave.. you are missing out on a lot of good stuff! Join us nowww at Boutique Babe Cave!)
Back to the blog now. One of the things that has come up in my inbox & DMS recently has been — How do I know what sales price to set for my products?!
Even though my favorite go-to answer always is — check with your gut because that shit never lies.. . it’s often confusing with the newbies. It’s more of a woo-woo kinda answer and definitely NOT what they are looking for sometimes.
So, I decided to dive a bit deeper on this!
Sales price is a combination of cost price, profit & mark up cost.
Sales Price = Cost Price + Profit + Mark Up Cost
➕ Cost Price is the wholesale cost at which you purchased the product from your supplier.
➕ Profit is how much $$ you want to make off of your sale.
➕ Mark Up Cost is the cost you want to add to your product that you can offer as discounts or markdowns during a sale in your store.
You see often times when you are setting a price for your online boutique, you increase the price by a certain %age or dollar value without keeping into consideration how you are going to make profits in case of markdowns or offering a discount to your customers.
However when you ADD the markup cost, it’s an addition to the profit price & regardless of markdowns or not, you are still going to make profit at the end of the day. Isn’t that why you started or starting your boutique in the first place??!
Here’s an example — You selling a tanktop that cost you $14.
✔️ Case 1: You double the cost price. Your new selling price = $28
✔️ Case 2: You first double the cost price & then add a 10% markup cost to it. Your new selling price = $30.8
👉🏻 Now when you do a markdown sale or offer a 10% discount to your customer –
In the first case, your SP (after discount) will be = $25.2
In the second case, your SP (after discount) will be = $27.72
See the difference adding a markup cost vs just adding a profit cost.
The margins you add to the cost price are going to help you with not only pay for your bills, payroll, buying more inventory, overhead expenses, marketing & more but also run a sustainable long term boutique.
You CAN NOT run a successful boutique by upping cost price by $5 and not being able to save more than 50cents at the end of the day because you didn’t calculate your outgoings right. You’ll end up paying all the expenses from your pocket.
Want more such tips to starting & running your profitable boutique?