Speaker: 00:00:00

Pricing your products makes you feel anxious or guilty.

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You're not alone.

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I've worked with thousands of boutique owners who really struggle with the idea of how

much do I charge for this item?

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I think the underlying question that causes the anxiety though is will customers actually

pay what I charge?

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From running my own boutique to helping thousands of other boutique owners and clothing

brands get started and become profitable, I have seen

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firsthand how pricing can make or break your profit and frankly your entire business.

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It's one of the most emotional and most misunderstood parts of running a boutique.

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The thing is, it doesn't have to be.

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This is part three of our three part series on how to build a profitable product

assortment and today we are diving right in to how to price.

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these products and how do we price these products so that we make a profit and we don't

push customers away because let's be clear if your pricing isn't right, you'll never make

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a profit and frankly, it's time to fix that.

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Let's start off with the mindset piece of this marking up your products isn't greedy.

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Okay, this is survival.

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This is also just like how retail works like the fact that you've decided to feel like

it's greedy or you can't do this or you want to be affordable.

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I get it.

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I do.

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But that kind of mindset is not going to help you be a profitable boutique owner.

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And that's what we do here.

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The reality is that getting that product to your store, even though the cost of an item

isn't everything, there's so much more that goes into deciding what the price is.

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Remember, if you have a boutique, your cost is yes, the cost of the item, but it's also

the cost of

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You getting that item, you shipping that item to yourself, styling it, photographing it,

launching it, all that time that you've spent.

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And if you have rent and staff and all of these other overhead costs, like that is

stressful.

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The thing that a lot of people don't realize is that the way that you pay for all that is

through pricing your product correctly.

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If you want to stay in business as a boutique owner, a gift store, a kid's store, whatever

you're making, clothing, you have to be at a 55 % margin at minimum.

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That's just the math.

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I've done it over and over and over again.

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Anything lower than that, you're just not going to be able to pay yourself.

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You probably won't have the cash flow that you want to be reinvesting.

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And frankly, like you're going to end up losing money on things at a certain point.

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To hit that number, you need to mark items up between 2.5 and 3X.

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So it means a $10 item that you've paid for at wholesale cost becomes a $25 to $30.

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retail price.

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Okay, I don't want to lose you here either.

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Math is not everyone's favorite sport, but I am here to help you enjoy math and at least

understand the very, basics of retail math because honestly, they're kind of logical.

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And I think that if we see math and we see the retail math behind what we're doing, it

just starts to make more sense.

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It starts to click.

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So I like to use the terms markup and margin sort of interchangeably, but

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They're not.

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So let's just be so clear about that.

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So markup is how much more you charge at retail than what the item costs.

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Okay, so that's what I just described to you.

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It's a $10 item becomes a $30 item because we times it by three.

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Okay, so that's markup.

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Now margin is a little bit different.

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Margin tells us what percentage of your selling price is actually the profit.

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So unfortunately, you need to know both and we need to understand how both affect each

other.

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Go back and imagine you have that $10 item, you're gonna charge $25 for it.

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That's a 2.5 markup and you're going to make 60 % margin on it, meaning that 60 % of that

item sale is profit before we end up putting that money into like expenses and things like

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that.

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60 % of its profit.

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If your margin is below 50%, you're just gonna struggle to pay overhead.

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You're gonna struggle to really scale.

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And I wanna just say, if you think you're someone who's like, I'll be online, I won't have

any overhead costs, that's not true.

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That's a myth and I have spoken to so many boutique owners that have been burned by that

mindset too.

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It's always going to cost you money to run a business period, end of story.

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I dive into so much of this because I hear every single day,

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I'm making so much money, but there's nothing in my bank account.

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This is why.

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The absolute biggest mistake I see like 98 % of boutique owners make is that they're going

to market or they're going on fair.

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They're going to buy products.

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Basically most boutique owners are doing pricing backwards.

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They go out and they buy a bunch of products and then they come back and price it wrong.

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This is the exact moment where profit starts to just

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Disappear I want you to always reverse that process So we are going to have a list of

items or departments and we're going to put retail prices to it We're gonna say how much

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would someone pay for this?

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What is someone else charging for this and when I say someone else I don't mean the

boutique next door.

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I actually most of the time mean a national retailer.

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So as you're doing this pricing first

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then you just know you're gonna hit your margin.

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All you have to do is look for items that fit into that margin.

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So often when I go to market with people, I'll hold up an item and I'll say, how much

would you charge for this?

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They'll give me the price.

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I'll look at the cost of it and I'll say, nope, can't afford it.

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Nope, can't afford it.

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Why can't you afford it?

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Because your customer won't pay enough of that difference so that you make a profit.

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The cost is sometimes too high.

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And that's okay.

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Sometimes the cost is too low and you can make a ton more.

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But what I really need you to do is before you buy, create a retail pricing structure.

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Understand how much you can charge for things and then how much you need to pay at

wholesale.

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you know, including fees, all that stuff to really hit your numbers.

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Honestly, I teach this every single day.

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And more specifically, I teach it in a digital product called the Smart Start Inventory

Plan.

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It is a paid, very low cost digital product.

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But in that, I teach you how to build a product assortment that prices you for profit,

that helps you understand exactly how much to buy once you have that set up.

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So if you wanna build a buying plan, an inventory plan, or just start wrapping your head

around how to manage inventory in a way that makes you money, the Smart Start Inventory

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Plan is 100 % going to solve that problem for you.

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I will show you how to create a buy plan based on your numbers, not just like, I think

this will sell, or like what the vendor told you you should do.

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If all of this is really vibing with you and you're like, honestly, I do need to learn how

to do this, comment smart below and we'll send you the link to that digital product.

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And honestly, this could save your business.

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Especially if you're struggling so whether you're starting out or you're like, I'm not

charging enough I'm that person that doesn't have the money in your bank account Please

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get the smart start inventory plan so you can start to unravel that and you don't come to

me in like three years being like I have no money at all and I'm millions of dollars in

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debt like no my students that start off with me do not end up like that one term you're

gonna hear like Everywhere in retail, especially if you're attending markets or shows is

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this really old-school term called keystone

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You may also hear MSRP, which means Manufacturers Suggested Retail Price.

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A few things about this that we need to talk about.

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One, Keystone is usually referred to as a 2X margin.

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So you already know I don't like it.

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It is only saying a $10 item is a $20 item and $10 is your profit.

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Like that is not enough.

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You might be sitting there saying, but that's huge.

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It's not.

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It's not enough.

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Keystone's not enough to keep you in business.

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It maybe was like 50 years ago.

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It's just not anymore.

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On the other hand, MSRP is often with a brand that sells to national retailers or they

sell on their own website.

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And so they want to keep their retail pricing the same across the board.

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You wouldn't want in your clothing brand someone to say, I know I can get it cheaper on

the brand's website or I know I can get it cheaper at this local store.

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Manufacturers suggested retail price is usually something that a vendor will want you to

stick to.

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That said.

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many vendors and there's a couple websites that will list like an MSRP and it's a

suggestion and it's a bad suggestion.

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So what we want you to do is actually go higher on most of those.

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Most manufacturers suggested retail prices are a 2x markup.

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It's not enough.

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So I want you to make sure you talk to the vendor and say, okay, this is suggested, but is

it required?

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That's the difference.

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And that's where you're going to be able to say a heck yes or a heck no to something.

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You basically always have to think about what is the minimum margin that I need to run my

store.

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Most people, especially

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with the way that rent is places, utilities, like costs are higher than they've ever been

before.

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And so making sure you pad your margin, getting that 2.7x, 3x, 4x, 5x, 10x, I don't care

what it is.

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If you can get more margin, take it, okay?

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So if you are in a high traffic, visible area with a high end clientele, go higher.

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get better markup, you can do it.

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I think again, this goes back to the mindset of like being affordable or feeling guilty

about charging too much.

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Like if you feel guilty about charging too much, do not start a boutique.

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It is going to be very hard for you to be successful because that's just not how this

works.

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And like at the same time, you have to remember every store out there is doing this,

whether it's toilet paper, iPhones, it doesn't matter.

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There's always markup on everything.

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And why?

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Because those companies need the margin dollars.

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They need the profit dollars to stay in business.

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You do too.

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A little known fact about pricing is that it's all about the presentation and all about

how things sit within your assortment.

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So once again, the idea of going to market, buying a bunch of stuff and then pricing it

later.

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I know who does that because I go to your website and your prices are all over the place.

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I know that you don't have a plan.

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Higher level inventory teaching is more about the price value relationship.

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So if I go on your website and I see two tops that look incredibly similar and they are

very different prices, I am freaked out.

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I'm like, what are they doing?

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What's wrong with these?

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Or like, what's good about this?

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What's wrong with this?

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It doesn't matter what you paid for the item.

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It matters how you present the retail price of the item and then also what you present it

around.

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So I'm not gonna lie.

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Like I have seen...

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at vendor booths products that I know could sell on a high end website and they're like

$14 cost and I know I could charge $200 for it.

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Why?

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Because I would have a great brand that looked high end, that looked luxury.

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I know that I would present it with other styles that were 150, 250, right?

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So it doesn't look crazy high or crazy low.

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It's all about how each item sits within the assortment.

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So two ways to look at this.

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One is how do all of the items in one category relate to each other when it comes to

pricing?

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Are all of your basic dresses the same-ish price and then all of your over-the-top dresses

the same-ish price?

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Okay, good.

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You're at least starting out like giving yourself scale.

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Everything cannot be the same retail price, but also everything cannot be all over the

place retail prices So I always suggest picking two to three retail prices you stick with

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for a category T-shirts are a good example of this like maybe your basic basic t-shirt is

$25 But something that's a better fabric.

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Maybe it's printed like there's something interesting about it That's a $34 item and then

you have a t-shirt that's actually like way cool t-shirt.

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It's like embroidered and bellished It's licensed whatever that's gonna be a $60 t-shirt

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So you have the range and you have a lot going on within that one category.

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Now, where the other part happens, where I know that someone has not done this work, is

that items across categories don't make sense in terms of their pricing.

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So let me give you an example of this.

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If you go on your website and you have bottoms that are less expensive than tops, you're

doing something wrong.

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Your bottoms should always be at least a third.

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like 30 % higher than your tops in terms of pricing.

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Because what you want is someone to buy both.

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In general, we see most women's boutiques sell about one pair of bottoms to two tops.

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That's a good double check for you too.

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If you're selling tops and bottoms, how many tops to how many bottoms are you selling?

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So let's say you sell 500 tops, you should be selling about 250 bottoms.

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That's just the math.

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That's like what we see standard.

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Where we see this get a little bit wacky can be in basics.

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So let's say we have a basic legging.

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We charge $38 for that.

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but that's the same price as our sweet spot t-shirt.

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That's okay.

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Where it gets weird is when a pair of bottoms, like let's say a pair of denim is $50 and

that's the price that most of the tops are too.

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In general, we want tops to be a little less expensive than bottoms.

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So typically what we'll see is bottoms be anywhere from 60 to a hundred dollars.

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It could be higher than that, but I'm just giving you a basic like 60 to 100 bucks for a

pair of denim, slacks, trousers, whatever.

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And then we'll see somewhere between like 30 and $70 for a top, a blouse.

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And again, this is like very common boutique.

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You can put the range higher.

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I wouldn't put the range lower.

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This is like your baseline minimum, like how are you gonna make money?

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If you came to me and you said, I wanna set up a boutique, this is how I would start you.

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So when you think about these price ranges and you think about how you wanna be selling

things, how are you presenting them?

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How are you showing them off?

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Are you pairing the two most expensive things with each other?

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Or are you pairing an expensive top with a lower price top so people can see the

variation, right?

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There's gonna be certain situations where, you know, let's say you have a table and no

one's really looking at it.

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Well, maybe it's because it's too bland.

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boring you need a real over-the-top statement piece to put in the middle of that table.

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While that over-the-top statement piece might not sell, the things around it probably will

because people's eyes are drawn to it.

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You have to remember that how something is visually styled and priced also affect how it

sells.

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So for example, I had someone come to me and they were selling jewelry.

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It was all like $15 though and I was like...

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She's she gives me I don't sell it.

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I can't sell it.

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It's so affordable.

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I'm like, right It's too affordable like people think that this is stolen or like, you

know And i'm making a joke but like genuinely if something is too low price people will

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think something is wrong with it So you have to find that middle ground for your specific

customer for your location for your clientele What is that?

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Perfect what I would call sweet spot pricing That's where the majority of your inventory

is going to be in that category and then you'll support it around it and beside it with

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things in that category that cost more, that cost less, and then side by side like do

dresses work with cardigans and could I buy both and is it still under a certain price,

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right?

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All of these little nuanced things make such a big difference in a retail store.

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Now what happens when you hear someone say, this is expensive or it's too expensive,

right?

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I think this is where we

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can really shut down and sort of take it personally.

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Like our prices are not personal, our prices are business.

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Like they are based on the research we've done.

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It's based on the effort we've put in.

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It's based on the time, money and energy we have spent to be able to source that product.

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So don't feel bad.

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Like don't immediately go into shutdown.

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Not everyone is gonna be able or want to afford what you're selling.

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Like again, it's as much of a choice as it is.

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anything else.

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So try not to react to price resistance if it comes up for you.

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The customer is simply doing their own mental math on like, when would I wear this?

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Why would I wear this?

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Is it like, how much is it going to cost per wear?

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I literally would have clients do that.

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Like, well, I'm going to wear this like at least once a week for the next day.

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Okay, I'll take it.

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A good response for you in this situation would be to acknowledge how they feel.

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Hey, I totally get that.

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That is one of our higher priced items.

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And you know why it's a higher priced item?

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It's actually made by monks in the hills of the Himalayas.

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They have their own sheep that they uh shear and then they weave the yarn out of it and

then they

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hand knit these and that's why it's a one million dollar sweater.

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You have to redirect to the value and not apologize.

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So redirect to how it's made, how it's sourced, what the value, how many times someone

will wear it, what they can wear it to, how versatile it is, right?

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You have to stop being defensive about your prices and own them.

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Like really say like, well of course because it's worth that.

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I'm not charging it because I'm just like not all fun and games over here.

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I'm running a business.

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If you present your products at a price that you are so psyched

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about that you feel good about that you feel like, you know what, this is right for where

I'm at.

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This is right for the customer.

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This is right for the product.

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No one will question you.

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Like I honestly in my store, I don't ever remember someone saying something was too

expensive.

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Like never.

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People were always like, this is a great price.

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And I was getting 3X markup.

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So it does all matter.

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The prices that you need to charge, the things that you are finding, how are you sourcing

great stuff so that you can have great value for that price?

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And it's also about your confidence.

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It's also about knowing like I've done my homework.

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Like I know what things should be cost.

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Emily taught me how to price things so I make money.

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That is what we're going for.

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Not the like, well, I don't know.

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You know, I'll give you a discount.

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Do not default to discounts.

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The other part of this is do not rush to discounts if you feel like something is having a

lot of price resistance.

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So if a lot of people are coming in and they're saying, this is expensive, or you're

seeing people pick things up and then be like, you look at the tag and put, you know, you

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know when that happens.

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If you see that happening, here's what I want you to do.

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Do not put it on sale.

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Do not mark it down.

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You are going to gently cut that tag off.

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You're gonna go to the back.

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You're going to print a new tag.

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The new tags price is going to be like five to ten dollars lower than the original price.

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Don't go too far.

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Okay.

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We're just going to like slightly incrementally bring it down and then you're going to

retake the item.

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You're to see what happens if you need to do that again.

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Okay.

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Fair enough.

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Do not buy that item again.

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It's too expensive.

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Like it will not sell to your customer and that's okay.

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You learned but I think it's important to remember don't panic and start deep discounting.

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Get to a place where you know

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If you're studying your customer, you're studying what's going on, you then can just cut

off the ticket and replace it.

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And honestly, there are gonna be times where you need to take discounts, run sales, like

you're gonna sell through five of six pieces, that six piece you have to do something

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with, right?

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You'll generally always have to do some kind of sale in between seasons, after holidays,

like there is a cadence to doing sales and markdowns.

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But the most important thing to know is that when you price for profit, you're also

pricing.

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for markdowns, your pricing for sales.

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So again, if you wanna go out and just, you know, say a $10 items, a $20 item, use that 2X

markup.

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You can never mark it down.

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You can never put it on sale.

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You need every less penny that that makes you.

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But if you have a 4X markup on something, you can totally take a discount.

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You could totally take markdowns on it and not even sweat if you're gonna make money or

not.

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If this video has in any way helped you look at pricing and product assortment

differently, please subscribe to my channel.

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These are my favorite things to talk about.

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And my hope is that I pass a lot of my knowledge on to you because the more boutique

owners that work with me, the more profitable boutique owners we see out in the wild, the

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more successful we see boutique owners being.

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So if you are in a situation where you have a boutique,

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a clothing brand, a wholesale company where you're not making money, please reach out to

me.

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00:19:21,111 --> 00:19:23,933

Hello at boutiquetrainingacademy.com.

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I wanna hear from you and I wanna help you.

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Like I am a consultant.

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I need you to be proactive and reach out and tell me you need help and like get over any

embarrassment that you've like had in your business.

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Like I have seen it all.

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Like I've seen more things than you think I've seen.

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You don't scare me, your problems don't scare me, and I want to encourage you to reach out

if you need help.

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This video series has been really fun for me to make because as I said, I love talking

about product and profit and money.

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So if you haven't watched my other two videos, please go back.

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We'll put the links and we'll put them here.

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There's two more videos before this talking about pricing and product assortment that I

would love for you.

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to also watch and kind of catch up on.

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And as always, thanks for being here for the whole video.

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I really appreciate you.

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If you could give me a like, a thumbs up, a comment, all of that really helps me.

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We've been growing the channel so much lately and it's because of you watching, it's

because of you sharing.

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I just want to say thank you so much.

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My hope with this channel is that more boutiques absolutely thrive out there, more

clothing brands absolutely become million, five million dollar brands and that

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wholesalers, if you're a wholesaler, come see me and that wholesalers start to trim down

their inventory and be in a place that's financially healthy.

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Thanks so much for joining me.

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Here's to making lots of friends and making lots of money.

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I'll see you on the next one.