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A podcast built for founders and aspiring founders in the fashion industry.
In this podcast we will be sharing industry insights, talking with fashion business owners and experts and debunking industry myths and problems!
Hello and welcome back to the Fashion Founder Podcast. If this is your first time listening, I'm your host Charlotte and I help founders to start and scale their fashion based businesses. Today you're listening to episode 54 and I'm going to be talking about pricing today. Today. We're going to be talking about why you need to stop apologising for your price, discounting your pricing and having confidence in charging your worth and charging for your value.
Speaker 1:Today's part of my Selling Out series. So if you've been listening to some of the earlier episodes, I'm selling out series as a collaboration with my group programme. So I'm going to be releasing 12 different episodes across 12 different topics that are in line with the framework inside my group programme, which is called Scale Up. So let's just get straight into it. I also want to share that I'm doing a little bit of a different style podcast episode today.
Speaker 1:So usually I will sit at my desk, I will record and it's like a normal working day where I'm sat at my work desk speaking into my camera. But today I thought that it'd be really nice if I could go out for a walk while recording. And actually it's classic British summer or spring. We're middle of June and it's just pouring it down. So I thought, let's scrap that idea.
Speaker 1:And instead of recording while I'm walking, I'll record while I'm just pottering around my apartment. So I have some flowers to water. I have some other kind of loose ends to do. And I just thought, why not do that while I speak to you guys? Because I find that when you're talking creatively, this happens best when you're not sat staring at a screen inside the same four walls.
Speaker 1:Just the same way that when I have a client who's telling me I'm feeling a little bit creatively flat, I'm having a bit of a block. I tell them, Close the laptop, get outside, go and do something. It's the same way that your best ideas come when you're in the shower. We've all been there where you're in the shower and you thought, Oh my gosh, I have a solution to that problem I've been having, or I now know what I'm going to do with that thing, or I have a content idea, or have a product idea. All of your best ideas come when you switch off from trying to create the ideas.
Speaker 1:So that's why I'm going to speak to you in this setting today. And as I say, today's episode is all around pricing your product and not apologising for your price. So what I see a lot, especially with new founders, is that they charge their worth, they charge what their product is valued at based on their time, their energy, their effort, their overheads, the cost of production, their material costs. And because they're a smaller business, because factory MOQs are higher, because fabric quality is higher, generally your cost of goods sold is higher, so your price point is higher. And what they then do is they compare that to the High Street, they compare that to other brands, and they think, oh my gosh, my price is really high.
Speaker 1:That's why people aren't buying, and so I'm going to discount it.' And I'm going tell you today why you shouldn't do that. So first off, we need to know that we're actually not comparing ourselves to high street retailers. As a small brand, as a solo founder, your costs are generally going to be higher. Your MOQs are going to be lower. You will have taken more time and consideration and your decisions are more intentional.
Speaker 1:So your costs of production of your product are going to be higher, which means your sell price is going to be higher. That is just the nature of the beast. So in turn, means that your customer is going to pay more than what they would pay from Sheehan, from the high street, from Zara. And that's okay. It doesn't mean you're doing anything wrong if your pricing is higher than that.
Speaker 1:Now, if you're in a situation where you are getting people say, Yeah, well, I could buy that cheaper in Zara. I could get that cheaper elsewhere. Then that person probably isn't your customer. Chanel doesn't apologise for their prices and tries to bring down the cost of a classic flap, which I think is about $10 now. They don't discount that price or bring it down because some people can't afford it.
Speaker 1:They're not apologizing for their price point. They charge what they charge, what they feel the perceived value of that product is, and the customers and the consumers that value that product that can be willing and able to invest in that product do. Now I know that's quite an extreme example. We're not comparing ourselves to haute couture fashion brands, heritage brands like Chanel, but we are taking a leaf out of their book when it comes to being unapologetic when it comes to our prices. Not only that, but when you get into a cycle of discounting your prices, then that's what your customers become accustomed to.
Speaker 1:If you start off as you mean to go on charging your worth from the get go, then customers understand that that is the value associated with that product. It's the perceived value and that is what somebody decides a product is worth paying. So if you get into a habit of regularly running sales, regularly running discounts just to appease your customer, they then fall into this cycle of, well, they've launched this new collection, but I'm just going to wait a few weeks because they're going to discount it anyways. And they don't actually buy it at full price. We want to make sure that your product profit is around 55% or above in terms of your profit margins.
Speaker 1:And the more that you discount, the more that you add promotions and offers, the more that you're eating into that margin, which in turn means that your overall profit suffers and that it's harder for your business to remain viable and be in a position where you can keep doing this five years from now. And what you find is that confidence in your pricing comes from charging your worth because like I say, there's so much that goes into bringing that product to reality. You've probably spent months in development. The product came from an initial idea or concept. It's then turned into a tech pack.
Speaker 1:You've got fabrics, raw materials, the sourcing of the factory, the sourcing of the fabrics. Everything that has brought you to that moment of having that tangible product in your hand has been a lot of time, money and effort. It's only right that you charge a price that you feel comfortable that is compensating you for all of that effort that you put in. And the confidence with that pricing comes from charging that price point and having people buy it and see the value and being really happy with the experience that they've had. That confidence in pricing doesn't come from going, Oh shit, people aren't buying, so I'm going to reduce it down, put on an offer, slash my prices.
Speaker 1:That only fuels that hesitancy in your price point. Your pricing has to work for two people. Okay? It has to work for you as the founder and as a business, but it also has to work for your customer as well. So this is why knowing your customer, understanding who you're doing all this for is so important because you then create your price point in line with that.
Speaker 1:And it goes right back to the very beginning. When you know who you're speaking to, you know who you're solving a problem for, you know who you're catering to, you then decide, okay, this person is willing and able to invest this price for this particular product. And that then determines every decision you make. It determines what fabrics you use, where you manufacture, the price point of the labor costs, the trims that you use, every decision is made in line with who this person is. And then you can make sure that your price point fits within their budget.
Speaker 1:People spend money on what they value. And when you see hesitancy around a price point from your customer, so if someone says, oh my gosh, I love your product or I love your brand, but you're not seeing them buy, there's a disconnect. They might say they love it, but they don't value it enough to part with their money. Now if we look at this on the other side, spend thousands on cars, weddings, properties, rings, jewellery, watches. They spend money on what they value.
Speaker 1:So it's not that your price point is too expensive if you're charging £100 £200 £300 for a fashion item. That is what it should be charged at when we're using ethical practices and we are being responsible in our supply chain. It's not that your price point is too expensive, it's just that that particular person doesn't value it. So instead of trying to persuade them to see value and encourage them and get them to understand your story, you actually just start reaching the people who do care. There can be a bit of an educational piece involved that you are showing people the behind the scenes, you're giving them an insight into what it takes to bring this product to fruition and educating them on your costs as well.
Speaker 1:Then they can understand, right, okay, I now see why that is charged where it is. But ultimately, we just reach the people who care to begin with rather than trying to persuade those who don't. And I get it all the time from people I know like, Oh my gosh, that's so expensive. It's like £50 for a t shirt. And it's like, Hang on a minute.
Speaker 1:If we consider that there's two metres of fabric being used for that particular t shirt, let's say the fabric cost is £15 per metre, that's £30 already on just the fabric. We then add the thread, we add the care labels, we add any embroidery for the branding, we add any other trims that might be included in this product and you're starting to rack up into the £40 to £50 mark, we then need to add the labour cost. So the cost of somebody sitting at a sewing machine and constructing this garment, pressing it, managing the quality control, packaging it up, sending it to the founder. There you go, you've already surpassed that £50 sell price that you're getting it for in Zara or wherever you might be buying it from. So it's actually, yes, a little bit of education around the product as well.
Speaker 1:I think so many people do not understand the costs that are associated with the fashion industry and we have become accustomed to cheap fashion and that is wrong. So yes, as a founder, it could be that part of your core pillars or part of your brand messaging is educating people on how much fashion items truly do cost. Okay. This was supposed to be a mini series in a mini episode, and I feel like I've gotten quite passionate about this topic today. So I'm going start to wrap this one up.
Speaker 1:But if you have gotten any value out of today's episode, please do implement it. If you're in a position where you're thinking, right, need to run a sale. Sales have been slow, so I'm going to discount my prices. Please use what you heard in today's episode and maybe rethink that decision. If any of this resonated with you and you want to go deeper into it and the 11 other topics that I've been discussing so far with a group of founders who get it, then Scale Up is my group programme that's designed specifically for you.
Speaker 1:So if you're looking to grow your revenue, grow your engagement, sell out of your collections, then this programme is literally designed for you. There are only 15 spaces. We are now starting on the July 6. Sessions will be every week. So we'll have a group session every single week in the evenings where we talk through each of these topics and leave you on your way with implementable strategies, tools, resources, and frameworks that you can implement straight away and start seeing results.
Speaker 1:You can apply now. There is a link in the show notes where you can head to the web page that tells you all the information that you need to know and a direct link to apply. But otherwise, I will catch you in the next episode.