In this article you will find the top print on demand pricing strategies and tips to help you maximize profit and maintain a successful print on demand business. You can read the full article in our Resource Center.
Understanding the main costs that affect your profit margin can help you choose the right pricing strategy - or combination of different pricing strategies - to mitigate their effects.
Here are some of the most common costs that can eat away at your profit margin:
- Design costs
- Production costs
- Shipping costs
- Platform fees
- Marketing costs
In the crowded print on demand market, selecting the right price isn’t just a way to stay competitive - it’s crucial to the survival of your business. Fortunately, Gelato has several pricing tools that can help you get a handle on things (once you make an account, anyway):
The Price Calculator uses your expected sales volume to calculate your potential profit margin, which you can factor into pricing decisions. Read more here.
The Price-Setting Tool in our product catalog helps you group products and make bulk edits. You can also select your currency and country to estimate shipping costs. Read more here.
Product Price Insights offer clear, intuitive price-setting guidance with added profit validation and checks for negative profit recognition. Read more here.
Four top POD pricing strategies
1. Cost-plus pricing
Also known as markup pricing, a cost-plus pricing strategy involves identifying your unit cost for each item, then adding a fixed percentage to that amount. Your unit cost is the total of all the production activities that went into creating that item (i.e., the stuff we outlined in the last section).
One of the main advantages of this pricing system is its easy implementation: retail stores, grocery stores, and department stores commonly use this pricing model. It also lets you point to variable product costs if you raise your prices. And, since the markup theoretically covers product costs and all your expenses, you can expect a consistent rate of return.
A key drawback to this model is the risk of selecting the wrong markup percentage. If you become untethered from the average market price, you’ll differentiate your store in the wrong way for price-conscious customers.
There’s also no guarantee your markup will cover your costs if you don’t hit sales goals. This model can also stifle your urge to comparison shop for lower service prices, which can hurt you in the long run.
2. Competition-oriented pricing
This retail price model is one of the most commonly used pricing models in the print on demand business, given the importance of price in this crowded space. It weighs competitors’ prices very heavily, sometimes ignoring items’ costs or market trends in demand.
Using this strategy, you might choose to price your goods slightly over or under your competition. If you charge more than your competitors, your unique selling point needs to be strong enough to justify your price.
3. Price bundling
When using a bundle pricing strategy, you’ll offer two (or more) of your items at a single, reduced price, saving customers more money than if they had bought everything separately. For example, if your online store sells baby clothing, you might bundle certain pairs of socks and onesies together at a lower discount price.
Implemented well, this strategy can set your store apart by adding more value for customers buying multiple items.
4. Dynamic pricing
Using dynamic pricing, you’ll adjust your prices in response to customer demand and the average market price for your items. This pricing model is prevalent within the rideshare industry, where “surge pricing” can significantly increase a trip's cost. In the travel and leisure industry, plane ticket and hotel room prices regularly rise and fall on the whims of travelers.
For the print on demand industry, you might temporarily lower your price based on seasonal demand or a relevant promotional event (perhaps with clever bundling). While this is a great model to help capitalize on recent market trends and opportunities, it can also cause friction with customers frustrated by your slippery price structure.