Maybe you are just thinking about starting a print on demand business and doing some research on how to price your products, or you have made the perfect design and are ready to sell, but here comes the question: how do you price your print on demand product?
When it comes to pricing your products for POD, you’re not alone! I was unsure how to price my product when I was doing dropshipping, terrified of pricing it too high so that I wouldn’t make a sale or too low and running the business at a loss. Pricing POD products is the same as pricing dropshipping products, as they are similar business models. It may seem complicated when you have to consider all the transaction fees, shipping fees, and expenses, but once you understand the underlying principles, you’ll see it’s a logical process.
In this guide, I’ll walk you through step-by-step on how to price your print on demand products so you won’t be caught off guard by unexpected negative profit margins after making a sale. Let’s begin.
4 Steps to Price Your Print on Demand Products
Step One: Calculate the cost per POD item
Knowing the cost of a single unit of your product is the first and essential step of selling anything, whether physical or digital. Without a complete understanding of all the costs involved in producing your products, it will be like taking a shot in the dark.
Production Costs
First up, you’ve got your production cost. This is what your POD supplier charges you for creating your products. Different printing methods have different price points. Options range from DTG (direct-to-garment), all-over sublimation printing (AOP), DTF (direct-to-film), and embroidery. Furthermore, different sizes and colors have different prices as well, so make sure you understand the product costs of each of the items/variants you plan to sell.
You may be wondering, when selling different sizes and colors, for example, of a hoodie, do you have to calculate the costs for each of them and set a different price? The answer is no; it will be too much work and confusing to run a POD business like this. Many businesses will set different prices for variants that are less popular, which is reasonable, but you shouldn’t charge more for a 2XL hoodie because of its higher product costs. (Not fair for bigger and taller customers!)
What should you do then?
There are several ways you can make your pricing simple by setting a base production cost:
1) Cheapest size for base cost
When customers buy the smaller sizes, costs are covered, but when customers buy larger sizes (2XL and above), you pay the extra out of your pocket.
This option is good if smaller sizes are what you sell or what you think you will sell the most, and another benefit is that it keeps the price low.
2) Most expensive size as base cost
When customers buy the smaller sizes, you earn extra profit, but when customers buy larger sizes, costs are covered.
If you are running a POD business that is focusing on plus-size individuals, this option is definitely more ideal than the previous one. You might be thinking that this option is probably the best, as it generates more profits. The truth is, pricing your products higher can result in lower sales numbers.
3) Use the average cost
The third method is to use the average cost of all sizes; in that case, you cover costs across different sizes without overpricing the smaller ones.
It’s important to note that this is not the final price of your product. You won’t be selling your products at a loss for choosing the first option; it will just result in slightly lower profits if you sell a considerable number of larger sizes.
Shipping fees
Shipping fees are costs you should definitely consider as well. All print-on-demand services provide clear shipping rates to different countries, including how much it is for the first item and additional items. You can include shipping fees in your product pricing and offer “free delivery” to your customers or set flat rate options for your customers to choose from. Whichever method you prefer, make sure that the shipping rate applied to the customer covers the shipping fee from the provider.
Taxes
Don’t forget about taxes when calculating the costs. Depending on where you are selling to, the tax rates will be different. For some platforms and in some cases, tax will be added at checkout, which means your customers will pay extra for the tax on top of your POD product. But in other cases, you will include taxes in your product price.
Transaction and payment processing fees
Other hidden costs you have to consider are the transaction and processing fees. For example, Etsy is free, but you have to pay a $0.20 listing fee for each item you list every 4 months and 6.5% transaction fees. Furthermore, there are also payment processing fees that vary based on the third-party payment provider you use. These fees are to be included to determine the pricing of your item. We’ll discuss platform costs later, as the per-item expense is difficult to estimate and can vary depending on your sales volume. I think it’s more reasonable to calculate that at the end.
Step Two: Set your profit margins
The second step is relatively easier than the first step, which is simply determining your profit margins. Do some market research, find what the reasonable profit margins are for your niche, or analyze how much your competitors are pricing similar items you sell as a guide.
According to Printful, the average print on demand profit margin is around 20%. However, some have reported lower or higher profit margins.
If you have a personal brand with enough social media following or you have an existing online community, you can set your profit margins higher. Your customers are willing to pay more as they are getting more than just a product with a design; they are paying for a status or sense of community. That being said, don’t be afraid to go for higher profit margins than you think; your customers will be happy to pay for your products as long as your design is good and the price is not ridiculously high.
When setting your profit margin, you can build in some margins to enable occasional promotions. But that depends on your overall business strategy. Are you aiming to set a higher price point and drive significant sales through promotions or focus on consistent sales at a slightly lower margin? That is for you to decide.
Step Three: Calculate the operating expenses
These are the expenses that do not directly relate to your pod items or costs that are difficult to calculate on a per-item basis. It will be much easier to set a target on the number of products you need to sell to cover these costs and make a profit.
Platform and hosting cost
As we have discussed, if you plan to use Shopify as your website builder, then you have to think about platform costs. Shopify’s basic plan costs $29/month. If that is the plan you plan to subscribe to, that will be the platform cost for you. Apart from that, maybe you have purchased a domain from GoDaddy; divide that by 12 months to calculate how much that domain costs you per month.
Software and tools
What software and tools are you using to run your pod business? Do you subscribe to any design tools like Canva? Of video editing software like CapCut to create content for your social media to find customers? Or any plugins or apps for different aspects of your business, like SEO or email marketing. Remember to factor in the monthly cost of all such subscriptions and tools when calculating your total operating expenses.
Step Four: Finish the calculator and refine
Once you have the costs per POD item, set a profit margin, and calculated the operating expenses, you need to set a target number of items to sell. This number represents your break-even point—the quantity of items you need to sell to cover all operating expenses before you start generating a profit.
Example of how to price your POD products
Okay, let’s run through an example using the method we discussed. We will use straightforward numbers whenever possible to make the math easier.
Step One: Calculate your cost per POD item
Let’s say I am selling a standard unisex t-shirt mainly to Australia through Printful.
The biggest size I sell is 3XL.
Production cost (DTF printing): $12 for all sizes until L, $14 for 2XL, $16 for 3XL. Average production costs = $14
Shipping Cost to Australia (first item): $6
Shopify Transaction Fee: 1.75% + 30¢ an order
Tax per item: 10% GST
FIXED COSTS PER T-SHIRT: $14+$6+$0.30+10% GST and 1.75% transaction fee = $20.30+10% GST and 1.75% transaction fee
Step Two: Set your profit margins
I researched my niche and saw similar unique t-shirts selling for around $25-$35 USD. I have some social following, and I decided to go with a 40% profit margin. (I have considered the fact that the actual profit margin will be lower after tax and transaction fees are included.)
$20.30 + 40% profit margin = $28.42, which I round up to $29.99.
Step 3: Calculate the operating expenses (Monthly)
Here are my monthly operating expenses:
Shopify Basic Plan: $42
Domain from GoDaddy (annual cost of $24/12 months): $2
Canva Pro subscription (annual cost of $165/12 months): $13.75
CapCut Pro subscription: $14.99
TOTAL MONTHLY OPERATING EXPENSES: $42 + $2 + $13.75 + $14.99 = $72.74
Step 4: Finish the calculation and refine
Tax: $29.99 * 0.10 = $3.00
Transaction fee: $29.99 * 0.0175 = $0.52
Profit per item: $29.99 – $20.30 (production cost) – $3.00 (tax) – $0.52 (transaction fee) = $6.47
BREAK-EVEN-POINT: $72.74 (total monthly operating expenses)/ $6.47 (profit per item) = 11.24
Which means I need to sell at least 12 of them a month to break even and more to make a profit!
If sales are low at 10 after a month, I can either adjust the price upwards to observe the effect or implement new strategies to drive more sales.
Pricing your print on demand products is more straightforward than you might think. Once you’ve determined an effective price for your first item, simply apply that process to your other products. Remember to continually refine your pricing as the market changes.
