← The Product Boss with Jacqueline Snyder
The Product Boss with Jacqueline Snyder
698. How to Price Your Products for Profit: A Proven Formula for Scaling Your Product-Based Business
00:21:11
Loading summary
Transcript1 lines
- [00:02]
A
Hi, I'm Jacqueline Snyder and this is the Product Boss podcast. I've helped launch and grow thousands of product based businesses, even one of my own. And over the last 20 years, I've seen behind the scenes of businesses just like yours. Whether they are makers, manufacturers, artists, or food and beverage businesses. I have spent so many hours studying it all. I've discovered what makes them successful, what mistakes they could have avoided, how did they turn their ideas into successful business, and what are the strategies that they have used to make more sales and be discovered by more customers. And this is what this show is all about. Whether you're just starting out or you're looking to become a million dollar product boss, I'm here to give you the permission to chase your dreams, no matter how big or small. All you need is the right mindset, a little courage, strategy and support, and you too can be the next million dollar product boss. Let's do this. Oh my goodness. Friends, if you are anything like me, you probably spend more time running errands than running your business. Am I right? Like, everything needs something, we gotta run around. And I knew that this was like a major issue for me back in the day, which is why I decided to get help where I could. And I decided to let Instacart handle all of my grocery shopping. So I no longer had to worry about running all the errands and having to run out and get more almond mil for my lattes. Rather, I was like, you know what, we're just gonna let Instacart handle that. So I want you to imagine skipping the store and getting back to designing packaging, orders, making, or maybe actually taking a break, even a nap. Remember those? Okay, so with Instacart, you can get groceries and essentials delivered in as fast as an hour so you can focus on growing your business without sacrificing a meal. Plus, less stress and more focus. And here's a tip. I've actually used Instacart before to order gifts from my daughter's friend's birthday parties because I haven't had time to run out and get presents. And I've been able to get the packaging, like the gift bag and the g, like hello, Sephora, delivered to my house while I was in the middle of coaching sessions so that I could have the present right. It's like having a personal assistant without having a personal assistant. So if you want to do what I do and get the help where you can, you can try it now if you head to the product boss.com Instacart hey product bosses, quick check in. Is your sales growth feeling stuck, like totally flatlined despite all of your hustle? Or maybe you're like, okay, this should actually just be harder. Maybe you're feeling like you're walking in mud and it's like, why does this feel so hard? Either way, if you're nodding your thinking, someone please, please, please just tell me exactly what works so I can finally grow without grinding myself in the ground. Well, I've got something so good for you. Say hello to the accelerate your sales podcast bundle. Okay? It's my absolute best, totally free playlist of episodes that'll show you exactly how to stop being the best kept secret. Right? Let's get this product seen. Or how about expand your sales across multiple channels without overwhelm, hello abundance. Or create products your customers can't wait to buy over and over and over again. And it's going to really help you start to build your business with that clarity, ease and joy. Because growing your business should feel amazing, not exhausting, my friend. This is your shortcut to more sales, less chaos, and way more fun along the way. Grab it now. It's a hundred percent free. I just wanted to make it super easy for you to find those episodes you're like, which episodes should I listen to, Jacqueline? Here it is. And it's packed with pure gold. All you have to do is head to the productboss.com growth or click that link in the show notes and then pop into your email and let's do this. It's your time to feel the freedom to find that abundance and to get passionate about your business again. All right, I'll see you in there. If you've ever tried to price your product for wholesale or Amazon or even a market and thought, there's no way I can make money like this, you're not alone. So here's the deal, product boss. The truth is, most product based business owners aren't priced to scale. So what does scaling mean? It means growing. To be honest, it means starting where you are and growing and growing and growing. And a lot of times your prices might work on Etsy or maybe even in person, but then they start to fall apart the second you try to go bigger. So let's talk about why, when we're not pricing correctly, things start to fall apart. Sometimes I think I've seen my students say that they're not selling because of their product or maybe the customer or it's the sales channel that they're on. And all of that could be very true. But the deal here is that if your pricing doesn't support your growth, you're always going to be chasing cash. Doesn't matter how many things that you sell, if the pricing isn't equal to having a profit, to paying for your cost of goods, to having the margins for whatever discounts you have to take, you're going to be chasing the sales are really not going to feel like they're making an impact. And I'm saying this to all of my friends here that are brand new and you're just starting at price or maybe you've started selling and you're not really sure what's going on. Or maybe, just maybe you are selling but you're like, gosh, like, am I actually making a profit? I, I worked with a million dollar company recently who was saying that she really had no cash left over. We're not profitable, we're just working really hard. If there's no profit to your business, right? So we need to make sure that we're priced correctly so that there is a profit leftover. Now I think a lot of business owners, when they're not educated in this, they're going to set pricing at what feels fair, right? Or they're looking at competitors and they're like, okay, I'm going to copy that. Especially on platforms like Etsy. And sometimes they think it's like what people will pay and that data is a lot of times pulled from what you would pay, where you live, your local town, your community, your country, wherever you are. A lot of times it's like, it's based on what you know, but not based on market research, not based on the industry, the category, the ideal customer avatar. And it's definitely not paid on what you need to earn per product sold. So the challenge here isn't Etsy or Amazon or wholesale or even your website. A lot of times the challenge is that when you try and sell across these sales channels without having a pricing formula to follow, without understanding all the elements that go into pricing your products and then why you need these margins so that you can scale, so that you can sell on these different sales channels. And I know you know this and this is I think a big hang up for people. Cause a lot of times people think like, I'm not gonna sell on Amazon because they take fees. Or I remember when Etsy raised their fees and there was a really big uproar, like how could they raise their fees? The thing is, is there's a cost to doing business. There is, there's a cost to Doing business. And that cost of doing business means that obviously there's the cost of your product, there's the cost of labor, there's a cost of packaging, right? Product people, we have a lot of money tied up in products. But when I was selling and doing my own thing and I was on an E comm platform, right, there's transaction fees that go into credit card. You know this, right? If you're running credit cards, you know there's transaction fees or maybe you're on stripe, there's transaction fees, there are ad fees. People who are running ads or cost of acquisition. There's always going to be a cost associated with getting people to know about your business. So sometimes on platforms like Amazon or Etsy or even Fair, they are taking fees. They do have percentages. And the reason they're doing that is because they're bringing the customers to you. This is what I teach my students in Sales Accelerator. I teach them that you should always have your own website, right? An E commerce website, a really good, solid, strong website is very important because when people find you out in the world, they're going to come back and meet you there. And you own your website. You do not own social media. I also teach my students if they need an email list, okay, you own your email list. But here's the deal. It's your responsibility to drive traffic to your website. So how do we keep that as like the hub to the wheel and then we keep driving people there. And the way that I teach that is that we get on other sales channels that have customers built in. So wouldn't you say that it's worth it? Wouldn't you say that the cost to do business on these platforms where you don't have to drive sales, you don't need followers, a large Instagram or TikTok presence, you don't need to run ads, but rather you're paying these percentages to these platforms that are doing their own marketing to get customers there. Wouldn't you say that's worth it? So that's why these platforms take fees, right? And the effort that they're making has built their own audience. So if you haven't built your pricing that supports having these margins so that you can sell on other sales channels so that you can pay the fees, so that you do have money that you could run ads or, or run discounts, then it's going to feel really hard. You're going to feel very stuck. So that's one of the things that we talk about a lot here at the product Boss. We talk about pricing. It's one of the main things that we fix initially. And actually across my programs, it's actually one of the very first things I teach is how do we price for profit? How do we look at what we're making? And ears up. If you're out there and you're not charging for labor, you don't know how to charge for labor. A lot of times I know students are like, well, I do it myself and I don't really charge. For me, that's okay. But we need to start charging because you need to build labor. In some of you out there that are manufacturing, you already have that built in because you're working with manufacturers and the cost of goods. But a lot of my maker students out there are not necessarily billing for their time or knowing how to do it in the right way. So let's talk about a simple formula. I'm going to give you the simple formula you may have heard me talk about on other episodes. You're going to probably have some whys and hows and how do I do this? And my students out there, like my sales accelerator students, you know, you've got the entire calculator inside of the program. We also touched on this. In Standout Society, there's also a calculator. So my students have the actual calculators, right? Because we have to dig into the numbers. There's a lot of different points that we put into this calculator to really fully understand our cost of goods, our wholesale price and our retail price. But I'm going to give it to you here. The first thing you do is you get your cost of goods sold plus labor. There's a few other things there, but whatever that is, that's the first price that you're coming up with, right? So. So if you're making jewelry and there's a chain and a lobster claw and a jump ring and the pendant, how much does all of that cost wholesale or wholesale? To you? Because you're buying at wholesale from suppliers and then plus what labor goes into it, what type of packaging, or maybe you have tags that go with it, that kind of thing. Okay. And I'm giving you very, very, very general coaching here, so just go with it. But know that there are more details involved. Recently I heard a student in one of my programs say, like, oh, like Joanne's is out and now I don't have a place for my fabric. Honestly, if you're buying from Joann's or Michael's or Hobby Lobby or craft places, you're paying retail prices, so you're always going to feel behind in costing. And when you go through this formula, you'll be like, holy moly, I can't sell it for that. It's because you really have to start with sourcing from people who are selling wholesale to you. We cannot be buying our product at retail prices and then trying to mark up and then try and sell them again. Okay? So if you're feeling stuck there, that's just a little tidbit. So we get our labor, our cost of goods, some of the packaging. This is all what it takes to make one product, and then you multiply it by two. Now, I'm going to give you a simple formula inside of my program. So my students, you know this, so you've heard this, and go back into the program if you have to hear it. But we talk about the different variations on this formula, when it can be less than this, when it can be more than this, when it should be more than this. But I'm going to give you all this general one here because again, I'm coaching students all around the world, and you're all selling lots of different things. So I want to just give you the basics. So you take your cost of goods, labor, that kind of thing that makes one product, and you times it by two. So with Cuffs Couture, it was $5 for my Cuffs to get them cut and sewn for all the things that went on them. The little tag, the box that it went in, and it was $5. So if you times it by two, it'll get you to $10, right? So when you get to that $10, that is your wholesale price. Now you might be like, jacqueline, I'm not selling wholesale. That's okay. Hey, friends. Okay, so I don't know if you wrote anything like me, but sometimes it feels like my self care routine is slipping through the cracks. Because when I'm juggling and wearing all the hats in my business and doing all the things, I mean, the last thing I have to do is like really fulfill that self care routine that my daughter's talking about. She's like, mom, so listen, so. So when it comes to running a successful business, you can't really pour from an empty cup. And a lot of times that self care is like one of the first things to get yourself recalibrated. So that's why I want you to meet Glossy. Now Glossy is my favorite daily beauty supplement designed to transform your skin and gut health from the inside out. And I'm Actually an investor in this business because I so believe in this idea of science backed ingredients for digestion and skin. Hydration and glossy makes it really easy to look and feel your best. Without that whole 10, 10 step routine in the mirror. The thing I don't actually have time for, all I have to do is simply mix the stick into my water and I'm good to go. So if you want to try this, because I so believe in this business, I think it's amazing. It's done so many wonders for my skin and my gut, which are two things that I need help with. And you want to simplify your wellness and your beauty. All you have to do is click in the show notes and you can use the code Jaclyn Snyder. So it's my full name, use the code Jaclyn Snyder and I'm hooking you up with 15% off your order. So. So cheers to glowing skin and a thriving business. If you're not selling wholesale and you're selling direct to consumer. Yes, let's do this right. You've got a better margin, a bigger margin. So what we do is we go from that times two, that gets you to wholesale and then the next step up is times two again. So it's let's say cost of goods and labor times two, times two. So what does that give you? If it was $5 for my cuff times two, it's $10 wholesale. I sell it to a store, they sell it for about $20. My formula was 5 times 2.2, I got to 11 bucks, 11 times 2.2 and I got to $25. So that was my base price for my cheapest cuff. And if you're like, I don't understand that formula, that's okay. There's variations depending on who you're selling to, how you're selling. But if you did nothing else but listen to me on this cost of goods and labor times two, times two, you will be in such a better place than probably where you are now if you have not priced in this way. So you're selling in person. Yeah, times two, times two. So if it's $5, times two is $10, times two again is $20. You should be selling it for $20, not 10. You're like, I'm not selling wholesale. Nope, that's not a big enough margin. We need these margins there. Unless you've decided here and now that never, ever, ever will you ever sell wholesale or with any other middleman, then this formula might change. But if you're like, okay, I got to get this price correctly. Guess what? When you sell direct to consumer, you're making all the money. And yeah, you're making less money when you sell wholesale, but you're selling at scale, you're selling more. So it's quantity. So if this is making sense, this is what you do and this is how you price across all platforms. Now I know that there's other coaches out there specifically to different platforms that are going to have different other formulas. And we talk about that inside, you know, let's say in the sales accelerator instead of our Amazon sales engine module, there's different information in there because it's a different platform. If you have an Etsy coach out there, Etsy might have a different way of telling you to price. But for me, being someone who has been in this industry for 20 years, I've worked with manufacturers globally and I have sold to boutiques and department stores around the world. This is the baseline that you should be. Even if you're an at home maker. If you're manufacturing now, some of you might be thinking, but wait, I source my products or I buy retail. That's a different formula and that's not what we're talking about here. But if you've ideated a product, you've come up with an idea and you're buying the product and you're making it in some capacity, whether you're a maker or a manufacturer. This is the margin. If you're sourcing something, like let's say you go online and you find a company overseas and you're getting all of your pens imported from them, then you're going to have that cost of the product finished. So you may just go, well no, that finished price, you just have a different way of calculating that cost of goods and labor. And then you'll still take that times two to your wholesale and then times two again to your retail. Where this gets a little bit funny is if you're a retailer and you're buying, you know, you have a brick and mortar and you're buying from other product bosses, you're buying at wholesale. So you're going to have a different formula. You're like, I didn't know I was listening to a podcast with a math formula today. Sure are. But that's okay because this is something that comes up all the time. And I want to make sure that you know this. Now here's some like, I bet some like bells going off in your head where you're like, hold on, this isn't gonna work. Where I Sell. Okay, so sometimes we're just priced incorrectly. A lot of times we're sourcing incorrectly. A lot of times we're not charging for labor. We don't know how to charge for labor or how to split up the amount. So these are details, these are very specific to your businesses. I can't coach all of you right here on the podcast, but when you understand your pricing and you understand who your ideal customer avatar is, which I teach in my programs, right? And the sales accelerator, in our first six weeks, this is what we're doing. We're talking about our ideal customer avatar. We're talking about who, what we're known for. We're figuring out our pricing, there's parts of our branding and our messaging. We're really kind of cleaning up our current sales engine, like where we're currently selling. So this is something that we accomplished in the first six weeks. And it's a big change that I've made recently because what I saw is there's front end part that we really want to dig into and work on. So when you do that and you start to understand what to fix then, and you understand your ideal customer, then, you know, it gets clear. You start to figure out what you're selling and where you're selling it. You start to understand how to structure your pricing for profit on whatever sales channel you're selling on. And you make sure that the sales channel you're selling on does fit your margin and your pricing. You learn how to increase sales, like in fact, make more sales without having to discount or lower your prices. And you start to kind of really understand systems and formulas and sales engines is what I teach without the guesswork. So, you know, I had a student recently that really wasn't. She wasn't sourcing her materials yet that she could make wholesale work, right? And so she was sure she just needed to drop her prices. Or maybe she thought, like, I gotta make a cheaper product. But the truth was, was that we first had to just look, we had to fix, right? So we had to look at this, say, hey, we've got options here. Can we source cheaper materials? Can we figure out a way to make this in a different way? Or in this point in your business, maybe wholesale is not the place that you're starting, but we can grow into it because long term, the more products you sell, the cheaper we can get the price per unit. And then you can start to sell wholesale, right? So this is something that I've seen happen time and time again. And the student was like, okay, I'm not ready for wholesale right now. I'm going to really dig into my business, start to sell more products, start to have more units going out the door, which could then yield a better margin, right? Meaning like maybe she went from three products to 10 products, 10 products to 20 products. And then like if she's starting to sell a hundred a month, then she knows, oh, okay, I know I can buy raw goods cheaper. I know that I can start to see if there's manufacturers or a team member I could potentially hire. So this is that scaling part. This is that part that pricing is just such a part of the foundation, which is why it's so strongly like built into so much of what I teach. Because this is the breakfast. This is the part that either prevents customers from buying from you because you're priced too low, typically not too high, you're usually priced too low and it stops you from scaling and having good money in your pocket because you're not having the margins. You're constantly chasing your tail. So I've seen this happen time and time again. And no matter where you're trying to sell Etsy, Amazon wholesale in person, direct to consumer through a social site, marketplaces, this formula is going to work across the board. Now again, I give you a very general formula, but it's going to work across the board. And then what does it do? It allows you to have margin for discounts. It allows you to have margin for the percentages that they take. It allows you to have margin if you ever decided to do ads. And this is exactly what is just like so foundational for you. So if this was helpful, which I hope it was, or if you have any specific questions, come over to Instagram and DM me at the product boss. Okay? Come just DM me say like, hey, I heard the episode, I'm a little bit confused about this. Come ask the questions. I'm there, I've got my coach, Suzanne there, Jennifer's in there. We're all in there and hopefully we can shed some light on this for you and help you because I, I'm here to help you make money. I actually recently made a declaration that I want to help a thousand women owned businesses hit a million dollars in my lifetime. I think we're probably at about 100. If you've made a million dollars and you're still listening to the show and we were any part of that journey, send me a dm. I want to know. That's my goal. I want to turn women into millionaires and also women into hitting that six figure mark, right? $100,000, $200,000, like let's go. And we're going to do that with our product based businesses. So until next time, my friends, start pricing for profit. This is where the money is made. And I promise you because a lot of you are really afraid of raising your prices. I have heard countless stories of when people have raised their prices, they have sold more. So charge what your product is worth, make some good money and you'll actually see the sales start to roll in.