!One of the benefits of having a private label line is that you can set the retail price for your products without having to consider the competition. We came up with a list of ways to help salon owners decide how to go about pricing their private label line. It has to be the right choice for the owner and their salon. These four thought processes contradict each other because there are different ways to look at pricing products. The 'right' thought process is different for everyone! Each of these points include different ideas to consider on how to determine retail price when pricing your product:
For more information, please visit our website.
1. Price your products at a minimum of 2 1/2 times your cost. When buying from manufacturers, the traditional markup is 2 times the cost. Currently, most retailers are marking up private label products at a minimum of 3 times the cost. At this markup, you are still offering a premium alternative at a lower price point.
2. What gap do you have in your retail offering that you are looking to fill ? Retailers always offer an opening price point, a middle level price point and a luxury price point. In the salon world that will vary from salon to salon . Here is a stake in the ground: Opening price point at $15-17, Mid-level at $18-$20, and Luxury price point at $21 and above (the fastest growing price point of hair care products is between $13-$22). Again, this will vary. An 'A' level salon may start their opening price point at the $18-$20 price point. I do not recommend having multiple offerings in a single price point. This confuses the stylist and client. The client does not want to shop you. The client wants you to search out the premier products within a price point and make that recommendation to them.
3. Make sure if you put your name on a product that you price it in keeping with your brand and level of salon in the market. If you are an 'A' salon or luxury experience and you are putting your name on a product, then that product should have a luxury price point. For example, think of Kohl's, Macy's and Nordstrom. Nordstrom would not put their name on a private label product and price it at a Kohl's consumer price point'neither should you. However, Kohl's would put their name on a product and sell it at an opening price point because that is their brand; affordable luxury.
4. This next point is not for the weak of heart. For the the 'A' level salons I recommend your private label be priced at your luxury price point. If you carry another product at a higher price point than your private label product, you are ultimately telling your client that you place higher value on the higher priced product. This tells your client that you sell your private label product for less because you do not believe in or value your private label product as much as the higher priced product. Your private label line then becomes less appealing to clients because they want to know that you put your name on something you are proud of and that you wouldn't sell it to them if you didn't believe in it 100%.
Each of the above points have merit. Pick the one that works best for you and discover how to determine your retail price !
Give us a call at (855) 592-, or request one of our sample kits and try our private label hair products for yourself!
When you are in the early stages of planning your own private label cosmetics line, a lot of things can feel overwhelming. One thing we see a lot of people struggle with is how to price their items. As our CEO recently told me, 'Pricing strategies can make or break brands.'
But don't panic. In this blog, I will give you all the information you need to develop a successful pricing plan that will work for you. Even better ' I will put it in laymen's terms. I promise you: if I can figure it out, you can too.
*note to audience: I'm not a businessperson. I'm just a writer.
Genie Supply wants to see your private label cosmetics brand thrive, so please contact us if you need any additional help.
Generally speaking, you will want to price your items at 8 times what they cost you. For instance: if you spend $2.00 per unit, then you will want to set your MSRP (manufacturer's suggested retail price) at $16.00.
This is not a fast and steady rule, but it is a helpful tool for a healthy profit margin. This will give your private label cosmetic line room to grow, which I'll explain in detail later.
You could, at a bare minimum, set your MSRP at 4 times your cost of goods. If your cost per unit was $2.00 in this case, then your MSRP would be set at $8.00. If you plan to always sell your cosmetics directly to your customers, then you can still make a profit this way.
However, you must be sure that you only ever plan to sell direct, because setting an MSRP at 4 times your cost of goods will leave you no wiggle room to work with distributors later.
For that reason ' before you do anything else ' it is a good idea to think about your future goals and what you want for your private label cosmetics line in the long-term.
No. And here's why:
Along the way, you will likely gain many repeat customers. In fact, one of the keys to success is keeping those repeat customers happy. Not only do you want their loyalty, but you also want them to spread the word about your private label cosmetic line.
Put yourself in their shoes. Would you be happy if your favorite lipgloss went from costing $15 to $30? Of course not. So, why would you expect that to be okay with your customers?
It's much better to sell it at a higher price to start off with and then lower the price later.
When you buy from a wholesale cosmetics company like Genie Supply, you will likely start small and grow slowly, which is why planning ahead is so crucial. When you set an MSRP for an item ' whether you are setting it at 8 times your cost of goods or 4 times ' it needs to be based on what your price per item will be at your endpoint, not your starting point.
I repeat: your MSRP needs to be based on your future cost of goods, not on what they will be when you first start out.
Why? Because you're not currently operating at scale. Your price per unit will go down as your reorders go up. For instance, if you ordered our lipgloss line at the MOQ (500 pcs) your price per unit would be approximately $4/pc.
You would only get 500 pieces, but it would get you off the ground and running and would only cost you around $. But, as your brand grows and you are able to reorder in greater quantities, your cost per unit will drop and allow your profits to expand.
Link to Gofar
In other words, if growing your private label cosmetic brand is a goal you want to set ' if you want to eventually get your product into a larger marketplace ' then you should not base your MSRP on the $4 per unit price you might pay Genie Supply for your first 500 pieces of lipgloss.
Instead, you should try to determine what your price per unit will be down the road, wherever that may be. What will your reorder look like once you meet your long-term goal? Will you be reordering pieces or 20,000? This will affect your endpoint pricing strategy, because the more you order, the less you will pay per unit.
That's a lot to pay for a start-up lipgloss. It makes more sense to imagine your future cost of goods ' perhaps $2 per unit, for instance ' and set your MSRP at $16.
It might feel like a pinch at first. Your early profits will be considerably less than your future profits. But ' we promise you ' if you stick to a reasonable plan, the wait will be worth it, and your customers will thank you for it.
Selling your product directly to your customers is a great way to start out. Plus, it has the added benefit of cutting out the middleman.
However, there are other goals you can set for yourself and selling direct-to-customer is only one option. In fact, it may be more of a starting point than ending point. Before you even decide on an MSRP for your items, you need to have a good idea of what you want that endpoint to look like.
Ask yourself if you plan on working with any of the following:
E-tailers: Online retailers will usually want to buy your products at 50% of the MSRP. If you have set your MSRP at 8 times your cost of goods, this should leave you with a satisfactory profit. If you have set your MSRP at 4 times your cost of goods, the profit may feel less satisfactory.
But, even at 4 times the cost of goods, you will still make a profit. This is why you should not set your MSRP below 4 times the cost of goods.
Double-down distributors: These companies will help get your private label cosmetics onto the shelves of stores and retailers, but they will only buy from you at 25% of your MSRP. In other words, while you might still make a profit if your items are priced at 8 times your cost of goods, you will not make one at all if you have priced them at 4 times your cost of goods.
Brick + Mortal Stores: Stores with physical locations like Wal-Mart, Macys or Nordstroms will buy your private label cosmetics at around 40-60% of your MSRP. This can be a great goal to set for yourself, but it can also take time to attain. That's why coming up with a long-term plan is key when determining your MSRP.
In order to grow your brand, you need to prepare some leeway. It will give you the opportunity to work with distributors and retailers.
Discount Brick + Mortar: Discount department stores like TJMaxx and Marshall's want to give consumers a decent discount - up to 50% off. This means they'll only be offering you about 25-40% of MSRP. The opportunity may come faster than you imagined, but can your brand sustain these types of deals?
Maybe you can take a hit on the first order in hopes of the second. This is great, but understand that it's also a risk. They may come back with a bigger PO.. or not.
Deep Discount E-tailers: Some of the most attractive market opportunities are the toughest to do when you're just starting out. The Ipsy's and FabFitFun's of the world reach out the small brands frequently (their main job function is, after all, new product discovery) and get your product in a LOT of hands VERY quickly.. but it comes at a steep price.
These retailers want to offer consumers a great deal and still make a buck. Where does this leave you? It leaves you with 12-20% MSRP in hand for your goods. That's 1/5 - 1/8th of the MSRP (see where the x8 comes from?). Unless you have great margins, these opportunities will be unattainable - or attainable at a real cost to your brand.
Want to stay small? That's okay too. And, if that's really your endpoint, then the 4 times cost of goods model might be the best choice for you. This will still allow you to sell 'at scale' while also making a small profit. Just remember that it will limit you to selling direct ' you will not have the wiggle room needed to expand your business.
Even if you do want to stay small, there are still just a couple more things to consider.
What kind of marketing do you plan on doing for your private label cosmetic brand, and how much will that cost? How much will you spend on website building, if any? Will you be buying the packaging for your products separately or included with your wholesaler?
Everything adds up, and it will all affect the decision you make about your MSRP. If you won't make at least a small profit after you add all this up, then you need to re-evaluate your pricing plan or your costs.
Our lipgloss starter pack is great, and you can read more about it and our other lipgloss packs here. But it is only one way to get started with Genie Supply. From cosmetics to skin care ' from products with CBD to products without it ' we have an awesome selection of wholesale cosmetics and skin care products to choose from.
And we would be honored to help you at each step of your private label journey.
Contact us today or check out our FAQ page for more information.
The company is the world’s best Private Label Sneaker Manufacturers supplier. We are your one-stop shop for all needs. Our staff are highly-specialized and will help you find the product you need.