Here's the formula: After you’ve determined your cost per item (make sure you include all your costs including design, setup and shipping), the next thing is to determine the sales price of the item. One way is to just ball park the price at what you think it should sell for, which is fairly unscientific and subject to errors that can cost you money, or do it by a adding a certain percentage over your costs, which is called your markup.
Let’s say a t-shirt cost you $10. If you were to mark up it 50%, that would mean you would sell it for $10 plus a $5 markup, or $15.
10 x 50% = 5 10 + 5 = 15
Many businesses like to mark up a small item by at least 2 or 3 times, or 200 or 300% or even more. That means that an item like a guitar pick that costs 25 cents can easily be sold for $1 or even more, if the market will bear it. On an item that costs you more, like our $10 t-shirt, your market might not bear a 100% markup (although you find shirts that cost more than that all the time), so you’ll have to settle for a smaller percentage.
No matter what, don’t drop your markup below 20% though. You have to make something for your efforts, no matter how small, just to cover those contingent costs that seem to pop up later.
Although you may see T-shirts priced around between $30 and $40 at concerts for A-list artists, don't think that you can get away with the same price. The typical going rate is actually between $15 and $20, but check what you're competitors are charging first.
Here's the "Welcome" video from Selling Music Merchandise course that describes what it covers. Get 7 days of free Lynda.com access by clicking here.
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