Commodity this thing, how to price certainly does not have a general rule.
First of all, from the buyer’s point of view, consumers are usually more sensitive to price, if possible, first of all, the target consumer’s perception of price research and analysis. Be sure to note that the cheaper the goods, does not mean that the more attractive to consumers.
And the price of clothing, according to the product’s circulation stage can be divided into 3 categories: factory price, wholesale price, retail price.
In principle, the price of various garments contains two parts: cost and profit.
Cost: material cost, development cost, operation cost, marketing cost, labor cost, and manufacturing cost.
Profit: Profit margin is the ratio of profit to price. The level of profit margin is related to the price strategy, sales method and brand added value of the enterprise.
Therefore, from the perspective of apparel enterprises, the price of apparel goods consists of production costs, development costs (design fees, planning fees, etc.), distribution costs (circulation fees, logistics fees), sales costs, management costs, etc.
The 3 values of apparel product pricing:
1. the physical value of quality and functionality: the “hard” value.
2. the conscious value of style design, combination, creativity and fashionability: the “soft” value.
3. the degree of satisfaction of consumers’ own specific needs.
Generally speaking, the “soft” value of designer brands, luxury brands and other high value-added clothing products is higher. The “hard” value of mass-market clothing products is higher.
Designer brands, high-end brands, luxury brands, the price of goods is higher because the brand to create a high “soft” value and a higher proportion of investment in planning and development, marketing and other aspects. On the contrary, the price of mass brand goods is lower because of the low proportion of costs required in design, which is one of the reasons. When a category of clothing is produced in large quantities, the proportion of design and other costs is shared and relatively lower.
The methods of apparel pricing are
Cost-plus pricing method, value pricing method, and competitive pricing method. The 3 methods are generally used in combination.
For example, the competitive pricing method pricing is targeted at the prices of competitors’ similar apparel products. Its specific measures are 3 kinds.
1. to take the same or higher prices than competitors.
2. taking a price slightly lower than that of the competitor.
3. adopting the average price in the industry.
Domestic commercial brand pricing logic
Basically, a clothing company uses the cost of goods as a base, and then multiplies it by a “markup multiplier” to determine the final hangtag price. First of all, a mature enterprise will have a relatively fixed markup multiplier, which comes from operational verification, whether the company can guarantee profitability and cash flow.
Domestic commercial brand pricing is generally set first multiplier. And the basis for setting the multiplier, one is the cost, but the brand premium capacity. Brands with poor brand value can only set a 5 times multiplier, while good brands can set a 10 times or even 12 times multiplier, such as Masefield and Zhihe.
Analyze the price rules of branded clothing market segmentation. Brand clothing is divided into FMCG, low and mid-range, mid-range, mid- to high-end, high-end, luxury goods.
Large FMCG brands are generally about 3 times, the common practice of low-end brands is 4-5 times the raw materials + processing, mid-range is 6-8 times, high-end 9-12 times, luxury goods 12 times or more.
Specific factors affecting pricing.
1 Brand positioning
2 Reference to the markup multiplier of similar competing products
3 Consumer acceptability
4 Brand premium ability
5 Different seasons
6 Different product lines
7 Products with different strategies
8 “Sense of value” of the product (cost effectiveness as perceived by consumers)
9 The lower limit of the markup after accounting for operating costs
Take a second-tier domestic women’s clothing brand as an example.
1. Product cost accounts for 15%, about 1 in 6.67, that is, the selling price is 6.7 times the cost, that is, a product with a cost price of 200 yuan, the selling price is about 1340 yuan, and the average multiplier of domestic brands (about 7 times) is similar.
2. the cost of wages accounts for about 10%-12%.
3. store facilities cost 6%-12%.
4. 20-30% of the cost of selling at reduced prices. This refers to the cost of discounted and reduced price sales.
5. Development, operation, production and leasing costs 20%-30%.
6. marketing cost of brand promotion about 5%.
7. other miscellaneous and wear and tear costs around 3%.
Finally the remaining 8% to 14% is the profit.
Why independent designer brand pricing is not cheap
First of all, there is a characteristic of designer models: they are not for the general public, but they care more about brand characteristics and style, and serve the people who fit the style.
The general public may be more familiar with luxury goods and popular brands. Luxury goods are rare and precious, with very high added value and very expensive prices; popular brands advocate keeping up with the trend and are updated very quickly, with more affordable prices.
The positioning of designer brands, on the other hand, is between luxury and mass brands, not as high and mighty as luxury brands, but with more design in mind than mass brands.
Designer models often have to bear the high cost of design, the details are also more careful, the production costs are much higher than the general factory. From the most basic fabrics alone, you can see the difference. Many factory fabrics are mass-produced on assembly lines, while good designer brands are willing to expend effort on fabrics.
Dries Van Noten, for example, focuses on color, print and embroidery, so that you have to specialize in custom fabrics.
It is not possible to customize the fabric for the design itself.
In addition to the fabric, good designer brands in the shape and tailoring process control is also very painstaking. For the most basic suits, Lemaire carefully adjusts the proportion of the front lapels and shoulders to give the suit a softer and more subtle shape, while the cut is clean and sharp, making the whole suit look simple and elegant.
The ordinary factory assembly line, more concerned about controlling costs, mass production, will not be so exhausting, some clothes on the body will lack a sense of “balance”, such as collar asymmetry, sleeve cage distortion, front and back piece asymmetry and so on. (Content quoted from: a Martin boot)
Therefore, the pricing logic of independent designer brands, in fact, is also cost logic, designer brands cost more, the corresponding price is also expensive.
For example, the cost and bargaining power of an order quantity of 100,000 pieces for a commercial brand for the public and 500 pieces for a niche designer brand are not of the same magnitude, and the price difference is definitely large.
To be more specific, the small order quantity of designer brands leads to high cost of fabric and accessories, which leads to small bargaining space in each link of the supply chain, including high production and processing fees of cooperative factories, thus high cost directly leads to high prices.
