Pricing models is a challenge every Shapie Shop Owner faces. In this emerging marketplace of 3D Printing storefronts, guidance and advice on perceived value is imperative. Today, Kim, one of our product superstars, breaks down pricing and markup so you can optimize your shop for success.
IMPORTANCE OF PRICING Though sometimes overlooked, product pricing helps shoppers form first impressions about the value of your product, the type of products you sell, and the type of shop you own.
Pricing also tells a story, and by setting the right price, you can make yours more compelling—and attractive to customers.
COMPONENTS OF PRICE
Shapeways is a unique marketplace where printing and manufacturing costs are factored in early on. So, as a Shapeways Shop Owner, all you need to think about is how much profit you’d like to make. Let’s start by looking at what a price is composed of.
The first part is the base price, which is the price you would pay to purchase the model for yourself. Second is the markup, which is the amount of money you want to make off each sale of your product. Add these two together, and you have your final price.
PRICE TO CONSUMER* = SW BASE PRICE + YOUR PROFIT
* Excludes shipping. EUR prices are displayed with VAT.
DETERMINING YOUR MARKUP
Your profit is determined by YOU. Your chosen markup is how much you’ll make each time a customer purchases your product, so it’s important to keep in mind your audience as you consider the final price. There is no set markup amount or percentage that will always work, but here are some guiding factors to consider.
Are you selling on Shapeways professionally, recreationally, or just to see what happens? All of these purposes are perfectly acceptable and will likely determine how many items you want to sell and how much money you want to earn. Trying to keep the lights on for your business? You may want to think about wholesaling. Just experimenting for fun? You may have more wiggle room to play with your prices.
As a Shop Owner, you should factor in these goals to help yourself earn your desired income, and to tell shoppers the story of who you are and what type of products you sell.
Are you selling jewelry? Home goods? Model trains? Memes? First, it’s important to identify the type of product you are selling because pricing can be effective in one category but ineffective in another. To pinpoint the category, you can edit details from My Models and browse all categories and sub-categories listed on our site.
Then, research how these products are typically priced. Online retail sites that sell similar products are great places to start. More importantly, take a look at similar products in the Shapeways marketplace itself. Make sure you are pricing in a reasonable range to avoid pricing too high for your customers or too low for the marketplace. Prices that are too low devalue products in your category and across your site and can make your customers question why your products are cheaper.
Which materials are you selling your product in? Are these products typically sold in these materials? What is the perceived value of your product in these materials? It is important to price materials for your product relative to each other.
As an example, some Shop Owners price different markups on items with the same or marginally different base prices. White Strong & Flexible and Pink Strong & Flexible share the same base price, but the pink version is priced higher since the Shop Owner deemed color a premium.
While production costs are covered by Shapeways and shipping costs are paid for by the customer, make sure to consider your own labor costs, especially if you are running a professional shop. Keep track of your prototyping costs as well as how much time you spend creating the design and designing the iterations. Log these in a journal, spreadsheet, or online app, and revisit them when it’s time to choose your markup.
After considering all these different factors, make sure that the price truly represents the value of your product.
What is the value of your product? For jewelry, it could be the value of elegance and style. Home goods—the utility. Mathematical art—the unimaginable intricacy. The pricing you set should represent this value proposition. If priced too low, customers may question the worth of your product. If priced too high, customer may find your product inaccessible.
Considering your product category, material pricing, and design costs, does your final price appropriately communicate the value?
The best way to know if you chose the right price is to try it out. If you don’t see any sales after some time, don’t blame the price just yet. Make sure the rest of your merchandising—your photos, description, product title, tags, and external links—are set properly.
And if you’re really unsure, you can even ask some of your customers!
If you have any additional questions, feel free to reach out to your Shop Owner coach, Savannah, or post in our new forum: Shop Critique (coming 10/10/2013)!