Introduction to Pricing
This tutorial shows you how the pricing guidance is calculated and how to configure both your pricing tiers and price points.
Once you've completed this tutorial, you'll be able to:
✔ Understand how pricing guidance is calculated
✔ Configure pricing tiers
✔ Set Price Points for your products
This tutorial should take approximately 16 mins to complete.
What is pricing guidance?
As you track your material inventory, we keep a constant tab on your total current material costs to produce your products.
Our pricing guidance feature thus calculates your estimated sale prices using the percentage markups you have configured for each pricing tier you create.
Your pricing guidance is displayed under the heading called "Pricing" on both your product and variation pages. For the example above, this is an Etsy pricing tier with no price point currently configured (as it is appearing as $0.00).
The guidance section has a suggested price of $29.22. This is calculated directly from the current material cost of this product's recipe. (If you haven't yet created a recipe for your product, you'll want to complete the Introduction to Recipes tutorial first, then come back to this step).
The material cost is then used along with the configured Markup for the tier, which is set as 150%.
This particular pricing tier has a commission fee configured also, so this is factored into your margin as an expense.
As this tier is an Etsy sales channel, the pricing guidance will also automatically factor in listing, transaction and Direct Checkout fees for you.
As a quick primer, a markup of 150% does not equate to a profit margin of 150%, it is the amount you are multiplying the base (cost) price by in order to arrive at your desired price. 0% markup is essentially cost price, and 150% is essentially 1.5x the cost price.
These suggestions will be constantly recalculated with the latest information we have about your recipe. If your material costs increase, you will find that your pricing suggestions will also increase. This allows you to be continuously reviewing your pricing strategy to ensure you are making the margins you desire.
An important note is that our pricing guidance is designed specifically to ensure that you factor in your manufacture costs to your prices, so it's wise to use this data only as a starting point to your final pricing strategy.
Overheads can be factored into your pricing guidance via the Pricing section on your Account Settings page (How do I find my account settings page?).
Your overhead amount can be configured as a percentage (%) or a fixed cost ($). Percentage overheads are calculated from the total material + labor cost of each product. Fixed costs are added to your total material and labor costs for each product.
For guidance on how to calculate an accurate overhead amount to use for your business please see our blog post here: How to calculate overheads into your product pricing
Configuring your pricing tiers
Connecting your sales channels will automatically create preconfigured pricing tiers for you, however if you'd like to add others you can do so via your Pricing Tiers area. To find this area, hover your mouse over the tools icon in the top right hand corner of the page and then select Pricing Tiers from the options that appear.
Tip: Alternatively, click the pricing tier name in your pricing guidance display to jump directly to this page.
The Pricing Tier form will allow you to configure the Name of the Tier. This should be a name that represents what the pricing is for: common examples are Retail and Wholesale. If it is a tier for a specific consignment location you may wish to name this with the same name as the consignee. Next, select a Color Key - this is the color shown in your Pricing Guidance for the tier and can be useful to quickly identify your pricing tiers in the guidance list.
Finally, set your Markup Percentage. This is how much your base cost (including overhead) will be multiplied by to arrive at your recommended pricing. 0% markup is essentially cost price, and 150% is essentially 1.5x the cost price. If there are any Listing or Commission fees involved in the sale you would also like to factor in, these can be configured directly below.
Have some questions?
If you have any additional questions, please get in touch and we'll be happy to give you a hand.